Last week Congress passed a debt ceiling deal that allows the US to borrow even more money. This bill increases the debt ceiling limit by $400 billion and gives the president the option to raise it again by $500 billion in the next several months. Additionally, a $1.2 trillion debt ceiling increase will be available after a “super committee” figures out a way to make that many cuts between Thanksgiving and Christmas of this year. In the end, it seemed like no groups on the left or right really liked this deal, and only felt like they needed to pass it in order to meet the August 2nd deadline enacted by Obama so he could get back to campaigning for his re-election. Many members of the House also wanted were eager to be done with it so they could go on vacation. Sadly, a majority of Americans who wanted no debt ceiling increase were screwed, as well as those who wanted a balanced budget.
To put things into perspective, our debt is now 100% of our GDP, which is roughly $16 trillion. In addition, this deal does nothing to cut our budget or annual debt immediately, but makes vague promises to cut in the future. It was a completely gutless move by our Congress to ignore the problem now and postpone the tough decisions until the future. In other words, it was politics as usual. Despite the deal, S&P still downgraded America’s sovereign debt rating from AAA to AA+, another gutless move that came completely after the fact, just like their rating of mortgage backed securities during the housing crisis. The markets are still scared by the uncertainty that Washington is causing, and this was reflected by the 500 point stock market drop last Thursday.
Despite the debt ceiling charade going on in Washington, the real concern for American citizens should be inflation and the Fed. Conveniently, the Fed’s been without scrutiny during this whole debate, despite some disturbing information that was released by an audit sponsored by Bernie Sanders’ financial bill last year. While the Democrats and Republicans fight over what amounts to straws, the audit revealed that the Fed has loaned out $16 trillion dollars to domestic and foreign banks the past three years. This amount of money printed is equal to our national debt from the founding of our country up to the present day. All of this was done without Congressional approval or oversight, at the expense of the American taxpayer whose currency is being devalued as a result. While the mainstream media gawks at the numbers proposed in the debt ceiling bill and the Democrats claim the tea party proposals are “satan sandwiches,” the Fed is printing money like it’s going out of style and no one is giving a damn about it. The fact that we might have defaulted on our payments shouldn’t worry people. What should worry people is the mountain of paper dollar bills being printed, which will ultimately make it harder to afford basic necessities. We can’t claim we have avoided a default crisis when we’re about to enter a dollar crisis of epic proportions. Once no one is willing to finance our debt and our interests payment shoot up past the $1 trillion per year mark, then a true crisis will be at hand instead of this phony debt ceiling crisis. At that point we’ll only have a few options left on the table, cut spending drastically or continue to print until we inflate our debts away. Based on this current debacle, I think we all know what the answer will be. Crank the printing presses!