Posted on 10/02/2013 1:00:19 PM PDT by GraceG
The Treasury Department has begun using the last set of accounting maneuvers at its disposal to allow the government to keep paying its bills until Congress raises the country’s borrowing limit, Treasury Secretary Jack Lew told congressional leaders Tuesday night.
In a letter, Lew reiterated that if the debt ceiling is not raised by Oct. 17 the government will not be able to meet all its financial commitments, such as making payments to U.S. debt holders, government contractors and Social Security recipients
“If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history,” he wrote. “For this reason, I respectfully urge Congress to act immediately to meet its responsibility by extending the nation’s borrowing authority.”
The Obama administration has said it will not negotiate over the debt ceiling, arguing Congress needs to act because the issue isn’t whether to approve new spending but whether the government should pay the bills it has already racked up.
(Excerpt) Read more at politico.com ...
So if these final steps fail like the previous steps, what then?
screw the lew!
The “Debt Holders” can be paid with ongoing tax revenue, that’s the ONLY aspect of government outlays that they can default on.
An orderly bankruptcy should occur.
(just trying to scare 'em a little ...)
but it won’t...the fuse has been lit and the crisis is about to explode. Wow...they actually gave us a date?
But, there will be a crisis just before then...remember the truckers strike is schedule for the weekend before.
As if $2.7 TRILLION dollars ain’t enough to meet their obligations.
("Alinsky, you magnificent bastard, I read your book!")
The Treasury has the Constitutional authority to create dollars.
The Treasury therefore does not ever have to borrow dollars.
Unfortunately, whenever Presidents authorize creating rather than borrowing dollars they are assassinated. Weird.
But ssshhhhhh, this is a secret. Need to keep borrowing in the name of the tax-sheeple-payer.
Why are they not setting up a site at www.gofundme.com
We are a nation of scaredy cats. So much of our thinking and behavior is controlled by fear of this or fear of that. It is because we are trusting in man and not the living God.
The U.S. is close enough to balance that, with a concerted effort, we could bring the gap. Dove-tailing the continuing resolution with the debt ceiling date would put everything on the table. Or, doing nothing until the debt ceiling date. That would too. The Democrats need Republican votes in the House of Representatives. We can and should get something in return for our cooperation.
So if the $250 Billion printed to purchase mortgage backed securities isn’t “created”, then what is it?
Regarding TARP purchases made by Treasury, I’ve seen no evidence that Treasury created dollars to fund TARP. Like all government spending, the cash came from either taxes or Treasury bond sales (borrowings). You can see the charts of oustanding Federal debt from then until now skyrocketing to the tune of several trillion.
When cash is needed, those Treasury bond auctions start crankin’. Institutional investors and central banks from around the world purchase the Treasury bonds at the auctions.
“Monetary policy”, i.e., how much new money to create and inject into the economy, is the purview of the Federal Reserve Bank (which is owned by banks, it’s not technically part of the Federal government, it is just chartered by Federal statue).
As far as the Federal Reserve purchasing MBS, yes, that’s money creation, since the seller (bank) is credited to their account at the Fed to “pay” for the purchase.
But you can see that transaction does not involve the Treasury Department.
If you follow it through, however, it’s interesting. If instutional investors all over the world are needed to waddle up to those auctions of Treasury bonds and buy the bonds with dollars...
well, what if they feel they own enough government-backed “low-risk” securities ? What if there just aren’t enough buyers of Treasury bonds ? They want a certain amount of them on the Asset side of their balance sheet, but just that certain amount.
Well...
with the Federal Reserve open market operations buying up mortgage-backed securities (similar debt instruments), now those investors that sold their MBS in the open market might now be in the market for some new Treasuries.
I understand that the monthly tax collections are greatly in excess of the principal and interest on the debt.
This being so, how is default possible?
They have to pay a lot more than just debt service every month.
Treasury bond auctions happen quite often.
When that inflow of borrowed cash stops, it doesn’t take long before the cash runs out.
Once the debt ceiling is reached, Treasury bond auctions have to stop.
It is made possible only if:
a. The President chooses to default.
b. Or so badly mismanages the cash flow that default is the result.
In either event, the burden is Obama's -- regardless of what lies he might tell.
Dems know that Treasury is buying virtually all of our debt. If the debt ceiling is not raised, the shell game is over and the house of cards comes crashing down.
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