The Debt Ceiling and "default".
Only a government would call not being able to spend beyond their means indefinitely "default". While I wouldn't bet a penny that the debt ceiling won't be raised, it has never not been raised, they're already calling not raising the debt ceiling a default. Default would be being unable to pay the "minimum payments" - the interest on our debts. Much like the last time we went through this, the fed.gov gets plenty of tax revenue to pay the interest on the federal debt, so the .gov wouldn't default, it just wouldn't be able continue spending 30% more than income. Shall we go through the numbers one more time? Scaling last year's income and deficit numbers (this whole "shutdown" thing is establishing this year's numbers) to a more realistic income level, let's divide all of the federal budget numbers by 25 million. Imagine you were a family with an income of $100,000.
|Federal:||Scaled to $100k|
If you were the federal government, you'd be spending $152,000 on an income of $100,000 for an "annual deficit" of $52,000. Just put it on the old credit card. On which you already owe $676,000. If you went to your bank with that income statement and asked for more credit, do you think you'd get it? That's what you get for not having Ben Bernanke as your banker.
Ben Bernanke to Janet Yellen:
Speaking of the Bernank, it sure looks like his successor will be Janet Yellen. Don't think anything is going to get better - she will just attempt to manage the collapse of the US according to the same rules Bernanke has been using. Peter Schiff, whom I agree with fairly regularly, says she'll be the worst Fed Head ever. Quoting Peter from an article on Yahoo Finance:
Well I think she is going to be even easier. If you recall, she was a governor who is in favor of negative interest rates. She argued that rates should be negative, and people should actually be punished or penalized for saving money.... more so than what they are losing just through inflation. They should actually have part of their savings confiscated. [emphasis added - SiG]Be prepared for the money faucet to be turned up to full. Obviously, she's a believer in QE - she may well be the one who is responsible for the Fed doing it until now. Numbers posted by Tyler Durden over at ZeroHedge show that for every $1 of debt we've made up, instead of a "growth multiplier" of 2x or more, it has actually been negative. Every dollar of debt has added about 15 cents of GDP! If you think spending a dollar to lose 85 cents is a good idea, you too can be a Federal Reserve Bank Chief.
Let me be plain about Janet Yellen's policies. If you're trying to save money, she is going to destroy you. Pure and simple.
EDITED 13 Oct 13 1440 EDT: There is an organized campaign to oppose Yellen called NoOnYellen.com. For whatever use a petition campaign is.