Craig Fiegener
InstantRiverside.com

During the next month you’re going to hear a lot about the amount of debt the United States is allowed to have.  Think of it as a massive credit card issued by a bank which keeps increasing your limit.   For purposes of this report, lets imagine the limit is a paltry $14.3 trillion.

Now lets imagine that you’re at a jewelry store, and want to spend $500,000.  If your lofty credit account was at its limit, your card might be declined.  Imagine the embarrassment.

In the real world, just such a dilemma is unfolding– granted we’re not on a shopping spree at Tiffany’s.

The United States of America needs to borrow $4 billion daily just to keep the government flush enough to pay its bills.  The country obtains this money by selling its debt obligations in the form of bonds, and other financial instruments, which the country pays back with interest.

Federal Reserve Chairman Ben Bernanke fears “severe disruptions” if the debt ceiling isn’t raised.  Raising it would give the government permission to print more money. 

It’s job security for the U.S. Bureau of Printing and Engraving.  Many economists would suggest it’s false security.

The nation has been stacking debt, on top of debt, on top of— debt, since 1835.

There is, of course, the financial theory that a government can’t be run like a business, and that some debt is good.  In this case the sum debt devours about 41 cents of each dollar.  That’s your money.

Right now the United States of America owes incredible amounts of cash to China and to the Social Security Trust Fund, which is leveraged for borrowing by the government.

There’s no magic solution to this dilemma.   What is good is that this topic is receiving so much play in the media.  There seems to be actual concern, and there should be.  Will Americans wait until 61 cents of each dollar is allocated to debt service– 81 cents– 91 cents?

Difficult decisions about spending must be made– there seems to be no debate on that.

Increasing the debt ceiling isn’t a solution, it’s gauze over the wound.

Think about that fictional credit card– would you use it if you couldn’t pay the bill?

Related news: Congressman Ken Calvert talks about the debt ceiling and health reform.

Filed under Video Library, News A3, Consumer News, Headline

Thursday, June 16, 2011

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