Dromond
Pleasantly abstruse.
So here is our dilemma. The US economy has smashed into the debt ceiling and is on borrowed time, waiting for a solution. The way I see it, we have three choices.
1. Raise the debt ceiling. This kicks the football down the field and provides a quick solution for now. This course is unsustainable, as the United States spends 40% more than it takes in. For now, though, it would keep things calm and allow for a more thoughtful debate on what course to take.
2. Don't raise the debt ceiling and default on interest payments. This is bad. Catastrophic, even. With one stroke, the full faith and credit of the United States is destroyed forever. Not only does this ruin the US's ability to borrow at anything resembling a reasonable rate, this will set off sympathetic economic explosions around the world. Think of the Greek credit crisis gone global, affecting every nation on Earth. And finally, the US dollar won't be worth the paper it's printed on.
3. Don't raise the debt ceiling and slash government spending by 40% immediately. This is also catastrophic. Government spending is woven throughout the economy of this nation. The sudden removal of 40% of that money will cause an immediate and profound contraction of the economy, triggering a depression. Everyone who depends on government spending for their livelihood will be in big trouble. Homeless shelters will close, food assistance programs will dry up, unemployment compensation will disappear, military personnel will either not get paid or get paid a pittance of their salary, infrastructure will go untended, public services will go unfunded, etc. The collapse of consumer spending in the United States will create havoc in export economies around the world.
Which course would you choose?
1. Raise the debt ceiling. This kicks the football down the field and provides a quick solution for now. This course is unsustainable, as the United States spends 40% more than it takes in. For now, though, it would keep things calm and allow for a more thoughtful debate on what course to take.
2. Don't raise the debt ceiling and default on interest payments. This is bad. Catastrophic, even. With one stroke, the full faith and credit of the United States is destroyed forever. Not only does this ruin the US's ability to borrow at anything resembling a reasonable rate, this will set off sympathetic economic explosions around the world. Think of the Greek credit crisis gone global, affecting every nation on Earth. And finally, the US dollar won't be worth the paper it's printed on.
3. Don't raise the debt ceiling and slash government spending by 40% immediately. This is also catastrophic. Government spending is woven throughout the economy of this nation. The sudden removal of 40% of that money will cause an immediate and profound contraction of the economy, triggering a depression. Everyone who depends on government spending for their livelihood will be in big trouble. Homeless shelters will close, food assistance programs will dry up, unemployment compensation will disappear, military personnel will either not get paid or get paid a pittance of their salary, infrastructure will go untended, public services will go unfunded, etc. The collapse of consumer spending in the United States will create havoc in export economies around the world.
Which course would you choose?
