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U.S. To Hit Debt Ceiling December 31st

WASHINGTON (MarketWatch) — The Treasury Department soon will begin making accounting moves so that the United States can put off hitting its debt ceiling at the end of the month, Treasury Secretary Timothy Geithner said Wednesday.

In a letter to congressional leaders, Geithner said the government would hit the $16.4 trillion debt ceiling on Dec. 31 unless he authorized the extraordinary measures.

The temporary moves would create $200 billion in “headroom,” according to Geithner. Under normal circumstances, that amount of headroom would last approximately two months.

However, it was unclear how long such measures would last, because tax and spending policies for 2013 are still under negotiation as part of the talks to avert the fiscal cliff, he said.

President Barack Obama and Senate leaders are returning to Washington seeking to avert the spending cuts and tax increases that are set to take effect in the new year.

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When Alice grew so big she hit the ceiling...

https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcSBpmgE...

she was forced to swallow what would reduce her size. So does Congress. THAT should be the "extraordinary measures" to be taken. Of course, now I have to hear the song. Think it's fair to say that, where the debt is concerned, logic and proportion have fallen sloppy dead? http://www.youtube.com/watch?v=2zf_AMkxYl8

When we try to pick out anything by itself, we find it hitched to everything else in the Universe.
~ John Muir

ohhhhh no

What will we ever do?

Misters Whoever-You-Are, Tear Down This Wall! End the Fed!

Misters Whoever-You-Are, Tear Down This Wall!

This USA does not need a cartel of banks to print up $16 trillion of National Debt created out-of-then-air. Fed be gone! Get thee gone!

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

Hear, hear!

Whew

The new year begins the next day. So everything is good to go for another year. lol

donvino

Defusing the Debt Ceiling Time Bomb

The $16.3 trillion national debt is partly an ILLUSION because the Federal Reserve owns $1.6 Trillion of it which it purchased through its QUANTITATIVE EASING (QE) operations. 



The Fed has been earning about $80 billion a year in interest income from these Treasury holdings and will earn more like $100 to $110 billion this year which will simply be remitted back to the Treasury.



In other words, this is debt that the Government owes itself! Our children and grandchildren aren’t even involved and they will not be saddled with this debt as long as the Fed holds on to it. This raises the question about why this $1.6 Trillion of Treasury debt held by the Fed should apply to debt ceiling. 



After all, what difference is there between the Treasury issuing debt only to have the Fed buy it back, vs. theTreasury not issuing that debt in the first place?

Is there any good reason why the Treasury and Federal Reserve couldn’t simply wave a magic wand over this $1.6 Trillion debt held by the Fed and in effect cancel it? This would reduce the outstanding debt to about $14.7 Trillion which is well below the current statutory debt ceiling of $16.394 Trillion.

The idea of canceling some portion of national debt held by the central banks seems to be gaining traction in part because it finds support from both the left and right ends of the political spectrum. Here is post-Keynesian economist Mike Norman of the Modern Monetary Theory (MMT) school of thought suggesting debt cancellation as a way to defuse the fiscal cliff time bomb..... 



http://www.youtube.com/watch?v=-BKiIflAr-4

Meanwhile, at the other end of the political spectrum Ron Paul sees government debt cancelation as a means to bring lasting savings to the federal budget....

http://www.tnr.com/article/politics/91224/ron-paul-debt-ceil...

There are also these articles which appeared more recently ( mid-Oct ) in the FT blog and Seeking Alpha....



http://blogs.ft.com/gavyndavies/2012/10/14/will-central-bank...?

http://seekingalpha.com/article/925171-will-central-banks-ca...


Instead of driving off the fiscal cliff like Thelma and Louise, the Treasury and Fed could give Congress the means to slam on the breaks. This would buy policy makers another year or so of valuable breathing space to formulate sensible fiscal policy for economic growth rather than causing a self inflicted wound on the economy and millions of American workers and businesses. 

Mr. Bernanke, if you seek transparency and accountability for the Fed…. If you seek prosperity for the American people then come to Congress and tell our law makers that the Treasury debt held by the Fed should not apply to the debt ceiling. Mr. Bernanke TEAR UP THIS DEBT!

Ed Rombach

ecorob's picture

this is EXACTLY what will happen...

right after martial law and gun confiscation!

its 'cos I owe ya, my young friend...
Rockin' the FREE world in Tennessee since 1957!
9/11 Truth.

Misters Whoever-You-Are, Tear Down This Federal Reserve!

End the Fed! - written by Ron Paul

"The Federal Reserve Act" :: It's just a piece of paper!

Authorizing a few to print debt-receipts for the many? ... For their person 6% / year profit (before sending a dime back to the US Treasury).

Failure to audit, since the Eisenhower administration? No audit? Wtithdraw privilege to print! Withdraw National Debt! In a land where the Sherman Anti-Trust Act forbids private monopolies, what is this monolithic Federal Reserve? Why does it follow Federal Express in the phone book, in the business listing after Federal Express ®?

Why does the Fed give itself 6% tax-free, un-audited profit, before anybody else? Every year? Why does this un-audited monolith audit our national banks? Something is amiss!

Misters Whoever-You-Are, Tear Down This Wall! End the Federal Reserve! End the Fed! - Foretold by Ron Paul, Congressman, Texas.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

Michael Nystrom's picture

Excellent points Ed

You should turn this into a thread of its own.

(Go to the blue bar at the top, all the way to the far right where it says +Post

- select "Forum Topic" (everything on the DP is a forum topic)

- I'd say stick it in the "Economy" forum

- Mark it as a DP original (use the top radio button)

- Put the content of your post into the text box

- Hit save.

You'll get a lot more visibility as a forum topic of its own, rather than being buried in the comments down here.

Merry Christmas Ed, hope you had a good one!

Michael

The Daily Paul continues to exist only with your support. Please contribute to the the DP's Summer 2014 Fundraiser.

As per your instructions......

I have re-posted this piece on the Economy forum. Merry Christmas & A Healthy, Prosperous and Peaceful New Year back to you Michael & Sim, Sim Sala Bim!

Ed Rombach

DJP333's picture

Bump. Oh Really???

Analysts said tax refunds for 2012 may be delayed??? Well then I will have to charge you (the Fed Govt), interest, and true market interest rate is probably at about 13.66% more or less. So, when do I get my money?

“In a time of universal deceit, telling the truth is a revolutionary act.”
"Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves."

Hell: Weather & weight slow delivery of outgoing parcel post.

HERODOTUS, Herodotus, trans. A.D. Godley, vol. 4, book 8, verse 98, pp. 96–97 (1924).

    “Neither snow, nor rain, nor heat, nor gloom of night stays these couriers from the swift completion of their appointed rounds”

Carved over the entrance to the central post office building in New York City. The method of carrying messages Herodotus describes was Persian and enabled messengers to travel swiftly. King Xerxes sent a message home to Persia that the Greeks had destroyed his fleet off Salamis in 480 B.C.— George Stimpson, A Book About a Thousand Things, pp. 69–70 (1946).

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul