Peter Schiff was one of the few economists who accurately predicted
Debt Doomsday: Coming in May 2011THE CATHOLIC KNIGHT: Here's the short story. If the Republicans allow the debt ceiling to be raised, the TEA Parties will crucify them and they know it. Furthermore, if they raise the debt ceiling this year, they just postpone Judgement Day until next year, and if they raise it again next year, they postpone it till the year after that. Each time they raise the debt ceiling they make Judgement Day that much worse, inflating the bubble just that much more for a much bigger pop later on. They know that too. Our government has finally painted itself into a corner.
by Marc Lichtenfeld
America’s debt ceiling currently stands at $14.3 trillion. This is the level that, by law, the government’s debt is not allowed to exceed.
Trouble is, the government’s present debt has swelled to $13.7 trillion.
This means that at the current rate, we’re on course to smash through that $14.3 trillion ceiling around May 2011 (although it might happen a month or two later, depending on what budget cuts are enacted in the next few months and how quickly they’re implemented).
So what will the government do about this? Same thing it’s done almost every year since 1962: Raise the debt ceiling so America can pay its bills.
Congress really has no choice in the matter either. If the ceiling isn’t raised, we’ve got a problem. A very big one.
A Fistful of Dominos
Without Congressional approval for additional debt, the U.S government cannot pay its bills – most notably, interest payments on treasury bonds, bills and notes.
If America defaults on those payments, or even misses them by just one day, the domino effect would be brutal…
•Domino #1: The country would lose its AAA credit rating and those bonds, bills and notes would no longer enjoy their status as the safest investments on the planet.
•Domino #2: In turn, a lower credit rating would mean that the United States would pay higher interest on its bonds in order to attract investors. Result?
•Domino #3: A tidal wave of selling through fixed income markets, driving interest rates higher still.
•Domino #4: Social Security would be hit hard, as its funds are invested in Treasuries. Suddenly, Social Security would have far less resources than just a day or two earlier.
•Domino #5: If money is pouring out of so-called “safe” investments, you can bet that in that kind of environment, the demand for riskier investments would be next to nil. Stocks and financial markets around the globe would plummet.
So why is this year’s Congressional raising of the debt limit different than every other?...
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So what we can look forward to politically over the next several months is some fancy footwork on the part of the Republicans and the Democrats. There will be an attempt to sell the idea of raising the debt ceiling with the promise of spending cuts later that will supposedly lower the debt later. Of course the American people have all heard this before. It's an old lie and I don't think it will sell this time.
It looks like America's economic Judgement Day will hit us sometime in middle to late 2011. Of course, there is always the possibility the debt ceiling will be raised, the bubble will be inflated more, and Judgement Day will be postponed till 2012, but by that time if they try to raise the debt ceiling in an election year, there will be political hell to pay in November of 2012. It would seem some Republicans, particularly the TEA Party favorites, are gambling that it's better to allow the government to default this year, let the bubble burst sooner rather than later, and let the chips fall were they may now, so they have time to regroup and figure out their reelection strategy before 2012.
Compounding this whole situation will be the Congressional hearings on the Federal Reserve to be chaired by Congressman Ron Paul. Paul has a reputation of calling out the Federal Reserve for what it is, and calling for it's abolition as well. That's going to attract a lot of attention to the fiscal policies of our government, and the tricks the government has been playing on the American people for nearly 100 years.
Whatever happens this is going to be the most interesting year in a lifetime to watch Capitol Hill fiscal politics, and of course, the consequences of whatever happens will have a direct, profound, and potentially painful consequence for each and every one of us in the months and years ahead.
America's economic Judgement Day is upon us - 100 years in the making. The "American Century" is over. Remember, God loves us. He does not want to destroy us. Rather, he wants to bring us to our knees, and he is doing whatever it takes to get us into that position.
Here's the "good news" in all of this - sort of. If America has the flu than Europe has pneumonia, as is demonstrated by this humorous take below. Everything in the below video is true, and it just demonstrates in three short minutes why the whole Western world is about to undergo the worst economic disaster since the fall of the Roman Empire...