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Federal Deficits & Debt Limits

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colin_twiggs
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Username: colin_twiggs

Post Number: 1074
Registered: 06-2009

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Sunday, April 17, 2011 - 07:55 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Another email received from CJ:

Mr. Twiggs, In light of the readily apparent difficulty that Congress and the President have to balance their budget in our lifetime, the only way to do it, without mortgaging our future and endangering our financial security, looks like to not increase the Debt Limit. Not increasing the debt limit will immediately force the Federal Government to cut its budget, and match expenditures to revenues. How the President and the Democrats equate that to default is a flat out lie. Default is in no way mandated by not increasing the Debt Limit. The Executive Branch will be free to decide how it wants to allocate the funds available: budgeting in real time. Of course it will pay the interest on the outstanding debt. But it clearly won't be able to continue to spend like a drunken sailor. Of course there will be pain, but unless we do it now, there will surely be pain in the future, for those who had nothing to do with it.


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colin_twiggs
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Username: colin_twiggs

Post Number: 1075
Registered: 06-2009

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Sunday, April 17, 2011 - 07:58 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



CJ, Thank you for writing.

It is important for the Federal government to balance its budget. The reason that there is a Debt Limit is because it is supposed to be a limit -- not a movable target. I agree that the threat of default is a lie, intended to scare the public into going along with the increase.

My only concern is that infrastructure spending would be halted before private investment expenditure has recovered: a savings-investment mis-match would cause a deflationary spiral that would damage the recovery. Though there may be other ways to achieve this besides adding the projects to the government balance sheet. Regards, Colin


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pjf000
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Username: pjf000

Post Number: 29
Registered: 05-2010

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Sunday, April 17, 2011 - 09:54 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Colin,
The debt limit has been increased 10 times previously. Whilst no doubt the Democrats will squeal, are they going to force a default by not agreeing to another raise?
For all borrowings there is always a settlement day. As to how and when that settlement occurs is the point of debate. Whatever it turns out to be will, more likely than not, be unpleasant (understatement) for most during the period. Certainly one gets a sense that fundamental change is not too far away.







Markets can remain irrational longer than you can remain solvent

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timmddbellsouthnet
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Registered: 04-2011

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This problem could easily be solved financially if congress would approve this extension with the proviso that it be the last extension. Ending Iraq and Afghanistan this year and letting medicare get bids on prescription drugs would go a long way towards deficit reduction. We also need some of the billions being wasted abroad to be used for an infrastructure rebuild. .Educationally the US is turning out millions of poorly educated people every year, while the need for labor type jobs decreases.Republicans are for spending cuts but do not see a need for a healthy lower-middle and middle classes.Tax breaks for the wealthy may trickle down when the wealthy are american manufacturers producing american jobs but not when the wealthy are exporters of american jobs and bundlers of bad mortgages.Let us not forget when the ceo's wall street loved most were the guys who cut or exported the most labor type jobs. The military will keep our troops in useless wars until we,like Russia have to bring troops home to keep from bankruptcy.

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