geojanes wrote:Brad, maybe an analogy will help. You are a doctor in an ER. You have a patient that is dying. He is obese, and has diabetes, heart disease, high blood pressure and is killing himself with food. He is also bleeding out from a ruptured femoral artery. His lifestyle diseases will surely kill him in a few months or years, but he’ll bleed out in a minute if you don’t fix the artery. What are you going to do first?

Neal Anderth wrote:Debt is a myth.

Debt is a myth.

geojanes wrote:And explains a lot of why this is extraordinarily dangerous and you should read it if you think a default is no big deal.

The International Monetary Fund cut its forecast for U.S. economic growth on Friday and warned Washington and debt-ridden European countries that they are "playing with fire" unless they take immediate steps to reduce their budget deficits.

The IMF, in its regular assessment of global economic prospects, said bigger threats to growth had emerged since its previous report in April, citing the euro zone debt crisis and signs of overheating in emerging market economies.

The Washington-based global lender forecast that U.S. gross domestic product would grow a tepid 2.5 percent this year and 2.7 percent in 2012. In its forecast just two months ago, it had expected 2.8 percent and 2.9 percent growth, respectively.

rickyp wrote:

Debt is a myth.

I'll try that with my bookie next time I lose a bet and he comes to collect.
Surely he'll see the logic?

bbauska wrote:George, please answer the question. If we don't do anything to ensure the debt ceiling issue won't happen again, will the next time be worse than this one? I appreciate the analogy attempt, but a simple answer says so much more.

Doctor Fate wrote:

geojanes wrote:And explains a lot of why this is extraordinarily dangerous and you should read it if you think a default is no big deal.

Who is supporting the idea of defaulting?

Are you still confusing a failure to raise the debt with default? They are not necessarily the same.

Step No. 1 is to raise the debt limit in a way that generates confidence in the markets. That means including a restraint on spending.

To accomplish this, the debt limit should be increased by an amount sufficient to service the U.S. debt for six months, provided that the proceeds from the increase are used to service debt obligations. Doing this would eliminate the argument that a U.S. default will end Western civilization as we know it. And we should also increase the debt limit by an additional amount sufficient to cover the federal government's anticipated borrowing needs for the next six months. But we must do so only if the administration and Congress agree to a cap on total spending that will be enforced by sequestering spending from specific programs or by cuts across the board—and only if, in addition, agreed-upon amounts and types of projected spending are eliminated. Special care here should be taken not to agree to waivers, exceptions or exemptions that could be used to defeat the purpose of the cap, sequester or across-the-board cuts.

We'll have to repeat the process twice a year until a comprehensive budget fix is reached. The caps should aim at achieving a historical ratio of spending to GDP of 20.6%. The debt-limit increase should not exceed the six-month period, because it is only when the debt limit has to be increased that Congress will be forced to muster the political will to enact enforceable spending restraint.

Ray Jay wrote:Here's the view from a former Treasury Secretary. This makes sense to me.

http://online.wsj.com/article/SB1000142 ... lenews_wsj

Step No. 1 is to raise the debt limit in a way that generates confidence in the markets. That means including a restraint on spending.

To accomplish this, the debt limit should be increased by an amount sufficient to service the U.S. debt for six months, provided that the proceeds from the increase are used to service debt obligations. Doing this would eliminate the argument that a U.S. default will end Western civilization as we know it. And we should also increase the debt limit by an additional amount sufficient to cover the federal government's anticipated borrowing needs for the next six months. But we must do so only if the administration and Congress agree to a cap on total spending that will be enforced by sequestering spending from specific programs or by cuts across the board—and only if, in addition, agreed-upon amounts and types of projected spending are eliminated. Special care here should be taken not to agree to waivers, exceptions or exemptions that could be used to defeat the purpose of the cap, sequester or across-the-board cuts.

We'll have to repeat the process twice a year until a comprehensive budget fix is reached. The caps should aim at achieving a historical ratio of spending to GDP of 20.6%. The debt-limit increase should not exceed the six-month period, because it is only when the debt limit has to be increased that Congress will be forced to muster the political will to enact enforceable spending restraint.