Debt Ceiling Capitulation Spells Trouble Ahead for the Dollar

By Stefan Gleason – Re-Blogged From Liberty Headlines

“Frustration” no longer adequately describes what reformers in Congress – along with millions of investors and taxpayers who voted for reform – are feeling. For many, hopelessness is beginning to set in on the prospects for tax, budgetary, and monetary reform following Wednesday’s GOP capitulation on the debt ceiling.

Democrats shamelessly exploited the Hurricane Harvey disaster to couple the $7.85 billion disaster aid package with demands on unrelated issues in the budget. Congress didn’t pay for the bill with offsetting spending cuts, as the Club for Growth and other fiscal conservatives had urged. Continue reading

Sleeper Issues Poised To Rattle Markets

By Clint Siegner – Re-Blogged From

Investors have been well-trained in complacency. They have spent the past few years watching markets shrug off momentous geopolitical events – each more quickly than the last. Brexit’s impact faded within days. Trump’s election faded within hours.

Stocks traded at all-time highs this summer and volatility made all-time lows. That is the set-up as we head into the fall…

Almost nobody seems nervous. In this age of central planning and highly artificial markets, it is hard to tell when this period of strange market serenity will end. But vigilant investors should have a few ideas. The next few months are going to challenge the status quo.

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Raising The Debt Ceiling Means Jacking Up Future Inflation

By Stefan Gleason – Re-Blogged From

The dramatic failure of the US Senate’s last-ditch Obamacare repeal effort leaves Republicans so far without a major legislative win since Donald Trump took office. No healthcare reform. No tax reform. No monetary reform. No budgetary reform.

The more things change in Washington…the more they stay the same.

Despite an unconventional outsider in the White House, it’s business as usual for entrenched incumbents of both parties. The next major order of business for the bipartisan establishment is to raise the debt ceiling above $20 trillion.

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David Stockman Sounds The Alarm

By Daniel Lang – Re-Blogged From Zero Hedge

As time goes on, it’s becoming abundantly clear that Trump isn’t going to be able to prevent a major financial crisis in this country. Depending on your beliefs, that’s either because he’s inept in some way, or because he’s being hamstrung by a political system that’s determined to keep our nation on the same unsustainable path. Whatever the case may be, it seems that there is no way that we can change course at this point. We’re headed for a financial crisis, and it’s going to happen sooner rather than later.

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Will Mid-March Madness Maul the Stock Market in 2017?

By David Haggith – Re-Blogged From Great Recession Blog

Many of the 2017 economic headwinds I’ve described will hit during the Ides of March, just as the Trump stock-market Rally shows signs of topping out. This might not be the Great Epocalypse — not all at once anyway — but a large and likely correction is looming. I think the bear is about to be let out of his cage.

Chaos emerged in emerging-market stocks last week, bond prices plummeted (yields rose to match their last 2016 high), stock-market volatility rose, and the Dow took its worst drop in 2017. Copper prices, a bellwether for recessionary conditions, saw their worst week since last September. It looked like the Trump rally in almost everything was rolling over last week, and that takes us into this week when several likely big bangs are scheduled to hit on the same day.

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Let’s Control Our Government

cropped-bob-shapiro.jpg   By Bob Shapiro

In recent days, Congress has raised the National Debt Ceiling once again. The new ceiling of $20+ Trillion probably will not be hit until 2017, after the next election. No surprise there, as Members of Congress have proven to be cowards yet again.

A rising National Debt implies a continuing Budget Deficit. The size of the Ceiling rise implies an acceleration in the Deficit, as pork barrel spending will be used to help current Members get reelected. When I was a kid, this was called corruption. I’m not sure why it is not called corruption today.

So, what’s so bad about running a Deficit?


  • The US Economy is made up of two sides: the Government side and the Private, Productive Sector side. The Government side, almost by definition, involves spending which the Private, Productive Sector would not do. The Government side takes money from those individuals and businesses which have earned it, to give to those individuals and businesses which haven’t earned it.

      By its very nature, Government spending is less productive – less valuable – to the whole Economy than spending by the Private, Productive Sector, even though official GDP numbers give them the same weight.

     Since Government spending is less valuable, and directly reduces the Private, Productive Sector, every Dollar spent by our Government reduces the US Economy – increased Government spending makes every American, rich, poor, and in between, less well off. Government spending makes us all poorer.

Debt Burden

  • Government spending, since it takes money away from the Private, Productive Sector, this side of the Economy is less able to grow. Real GDP growth during the Obama regime has been dead flat according to the official fairy tale numbers. GDP growth has averaged only about 2% during the last generation or two, compared to growth of around 3.5% before 50 years ago. An Economy growing at 2% a year will double in size in 36 years. In 36 years, an Economy growing at 3.5% will grow to be almost 3½ times as big. Out-of-control Government spending (and Over-Regulation) has robbed all Americans of that extra 1½ times of GDP growth. All Americans would have been 75% more well off (3.5 times vs only a double) with previous relatively low spending levels than we are with the “drunken sailors” in Congress, in just the last 36 years.
  • Continuing Deficits and a growing National Debt need to be financed, which takes even more resources away from the Private, Productive Sector. They encourage the Government to print more Paper Dollars, which reduces the value of all the Dollars which you and I have saved. Deficits and a rising Debt level are embarrassing, so there is a government urgency to screw with the official numbers, making them look not quite so bad. The Private, Productive Sector works best when the data it uses is accurate. It works best when the money supply is not being inflated. It works best when the Government leaves it alone to do its thing. Bigger, more expensive Government make all Americans poorer.

GDP Shadow Stats 0115

  • If GDP is dead flat, as it has been during the Obama years, and the US Population grows, then each American alive today has a claim to a smaller portion of that GDP. The per-capita GDP has gone down. Even by the Government’s manipulated figures, All Americans are poorer because of our Government’s activities.

In past essays, I have proposed several “Action Items” to help reduce Government Spending. I’d like to recount some those here.

  • No Bill shall be introduced, voted on, or passed which is over 50 pages in length. If the Sponsor can’t say what he wants within 50 pages, then he doesn’t know what he wants. This also means no more last minute “Ear Marks” to buy a Congressman’s YES vote.
  • No Member of Congress may vote YES on a Bill unless he can attest that he has read the Bill. He may vote NO or may ABSTAIN. ObamaCare was just one example of a Bill passed without giving Members of Congress time to understand what they were voting on.
  • Both Houses of Congress must send every Bill (and every amendment to that Bill) to a Constitution Committee, whose job is to show – specifically – where in the US Constitution every provision of the Bill is authorized. Both Houses shall hear/read public comments and must respond to each one of them in their report to their respective Houses.
  • A Constitutional Amendment shall be passed to Balance the Budget. It could include salary sanctions for the top brass of all three branches of our Government if the Budget is not Balanced during any year. The Limit shall apply to both Annual Spending and to Un-Funded Liabilities.
  • A Constitutional Amendment shall be passed to Pay Off the National Debt over a set number of years (perhaps 20), with a specific timetable.
  • A Constitutional Amendment shall be passed to place a Dollar Limit on Government spending, perhaps 10% above Government spending during the year it’s ratified. This will be an effective way to prevent further debasement of the Dollar. (A constant Dollar allows for more Government spending than a depreciated Dollar.)
  • A Constitutional Amendment shall be passed to require the Federal Budget to meet GAAP accounting rules, including Un-Funded Liabilities.

Our Government is supposed to work to increase the well-being of all Americans, not to make all Americans poorer.

World’s Largest Debtor Ever Raises US ‘Debt Ceiling’…Again

By Mark O’Byrne – Re=Blogged From

The US government has once again agreed to increase its so-called debt “ceiling” – this time from $18.5 trillion to $20 trillion.  The so-called debt ceiling is recognized industry-wide as a complete misnomer.


“The phrase “debt ceiling” sounds austere and restrictive, as if intended to keep a lid on government spending. Actually, the U.S. national debt limit was conceived almost a century ago to do the opposite: to make it easier for Washington to borrow money” (see: Bloomberg Quicktake)

Investment advisers Casey Research yesterday called the debt ceiling ‘a farce’. “Last week, Forbes reported the U.S. government has raised the debt ceiling 74 times since March 1962. The latest increase – number 75 – should help fund the government until March 2017 or so.”

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Debt Ceiling Debate: Don’t Mention Warfare/Welfare State!

By Ron Paul – Re-Blogged From The Ron Paul Institute

The US Treasury’s recent announcement that the government will reach the debt ceiling on November 3 means Congress will soon be debating raising the government’s borrowing limit again. Any delay in, or opposition to, raising the debt ceiling will inevitably be met with hand-wringing over Congress’ alleged irresponsibility. But the real irresponsible act would be for Congress to raise the debt ceiling.

Cutting up its credit card is the only way to make Congress reduce spending. Anyone who doubts this should listen to the bipartisan whining over how sequestration has so drastically reduced spending that there is literally nothing left to cut. But, according to the Heritage Foundation, sequestration has only reduced spending from $3.6 trillion to $3.5 trillion. Only in DC would a less than one percent spending reduction be considered a draconian cut.

Defense hawks have found a way around sequestration by shoving billions of dollars into the Overseas Contingency Operations (OCO) account. OCO spending is classified as “emergency” spending so it does not count against the spending limits, even when OCO is used for items that do not fit any reasonable definition of emergency.

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