The Pesky Neighbor and the U.S. Debt Ceiling

Politics / US Debt Jul 25, 2011 - 12:09 PM GMT

Imagine you had a pesky neighbor who somehow took out a mortgage on his house in your name and by some legal trickery you were obligated to pay for it. Imagine watching this neighbor throw drunken parties, buy expensive cars, add more rooms to the house, and hire dozens of people to wait on him hand and foot. Imagine that he also managed to take out several credit cards in your name. One by one, he would max them out and then use your good name and credit to obtain another credit card, then another and then another.

Each time, this neighbor would claim that he needed the new credit card to pay interest on the other maxed out credit cards. If he defaulted on those cards, your credit score would be hurt and when you wanted to buy something for yourself, it would be more difficult to get a loan and the interest you paid would be higher. Imagine that you mulled this over, and time after time, said nothing as he filled out more credit applications so he would not have to default on the other debt taken out in your name. Meanwhile, another shiny new Mercedes appears in his driveway. At what point do you think you might get tired of this game? And, even though you are left with no really good options, do you think you might eventually tell him to go ahead and default, just stop spending your money!

This analogy demonstrates the position we are in with our government and the debt ceiling. The government has run up a huge debt in the name of the American people, who are sick and tired of being on the hook for it. There are no really good options left. Defaulting on a portion of the debt may not be without costs, but it is better than handing the government yet another credit card.

The government is using the usual scare tactics to strong-arm the people into going along with more spending. Remember the rhetoric surrounding the big bailout of October 2008? We were told, not that this would be calamitous for the banks, but for the people, who would continue to experience massive job losses and foreclosures. We were told that the economy would sink into a deep recession if this money was not handed out to too-big-to-fail corporate cronies. So, after much hand-wringing, leaders from both parties, against unprecedented public outcry, agreed to shower money on the banks and increase the debt. The banks learned nothing, except that Washington will come to their rescue, no matter what. The people, however, continued to lose their jobs and houses anyway, and here we are, still in a deep recession.

When you read the above example, your first reaction might have been to dismiss the neighbor's debt as illegitimate and in no way your responsibility or your problem. You would be right. No fair-minded legal system would hold you responsible for such a debt, and would instead cart your thieving neighbor off to jail. Yet Congress can impose liabilities on you, your children, and grandchildren without your consent, and even without your knowledge. This is another example of government holding itself above the law. Much like the TSA claims the right to molest us, yet arrested a woman who turned the tables last week, stealing somehow becomes legitimate when the government does it.

We supposedly live in a nation of laws. For once, government needs to heed the law regarding the debt ceiling.

Dr. Ron Paul
Project Freedom

Congressman Ron Paul of Texas enjoys a national reputation as the premier advocate for liberty in politics today. Dr. Paul is the leading spokesman in Washington for limited constitutional government, low taxes, free markets, and a return to sound monetary policies based on commodity-backed currency. He is known among both his colleagues in Congress and his constituents for his consistent voting record in the House of Representatives: Dr. Paul never votes for legislation unless the proposed measure is expressly authorized by the Constitution. In the words of former Treasury Secretary William Simon, Dr. Paul is the "one exception to the Gang of 535" on Capitol Hill.

Dr. Ron Paul Archive

Comments

gAnton
25 Jul 11, 21:41

Yeah, Let's Cut Off Our Noses To Spite Our Faces!

As the comic strip character Pogo once stated, "We have meet the enemy, and he is us". There are so many various and diversified non-economic problems facing the US today that it would be very difficult or perhaps impossible to reasonably state which are the greatest and most basic of our problems (but we'll give it a go). For example, which of the following "randomly selected" fundamental problems is the most basic and greatest evil?

1. The upper 1% of US wage earners receive 70% of US wages and control 90% of the wealth.

2. Approximately 50% of federal election contributions are made by the 'too big to fail" US banks.

3. The widespread and epidemic incidence and high cost of treating health problems affecting the US population (e.g. overweight and obesity, alcoholism and drug addiction, diabetes, venereal diseases, psychotic and psychological problems, etc., etc.).

4. The widespread ineptness, malfeasance, and criminality of the CIA. They have missed most significant world events (the most recent being the "Arab spring"); they have engaged in such criminal activities as assassination and subornation of foreign government officials, etc.; they also have done the targeting for drone missile bombardment in various near eastern countries-- these bombardments have killed many innocent victims and are war crimes under the Geneva convention. (The CIA never writes anything down about the really bad stuff.)

5. Imperialistic US military forces are stationed in over 100 foreign countries, and they have no lawful business there. I have read much about "9/11", but I've read nothing about what motivated the 9/11 hijackers to sacrifice their lives for their country. And when the US finally captured Obama Bin Laden, instead of bringing him to justice, they murdered him. The irony of it all is that the US response to 9/11 has curtailed many US civil liberties, and has cost the US taxpayer many trillions of dollars. 9/11 will certainly go down in history as one of the most successful quasi-military operations of modern times.

The following quote is from William J. Dawson's book "The Quest of the Simple Life". While written to describe a similar situation to ours that occurred during the fall of the British empire, it very well describes the current situation of the American empire:

"The spade and harrow rust, and instead of swords being beaten to ploughshares, ploughshares are beaten into swords for the use of soldiers who are the gladiators of commercial avarice. The wealth of the country runs into the swamp of speculation. The scripture of Nature is cast aside for the blotted pages of the betting-book. Sport becomes not a means of recreation but of gambling; and instead of sturdy races bred upon the soil, and drawing from the soil solid qualities of mind and body, you have blighted and anaemic races, bred amid the populous disease of cities, and incapable of any task that shall demand steady energy, continuous thought, or sober powers of reflection or of will."

So what has all this to do with the US government's possible credit default? Which of the above listed problems would be ameliorate by an US credit default? And whom would be hurt most by the default--the Wall Street big bank one percentor or the Main Street little guy?

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.