Heard all about 'em, yet it's hard to really get too worked up about this impending showdown because, well, it's hard to see what horrors can possibly ensue from it once the deadline passes to raise the debt ceiling. Look at it this way: if the President's lawyers can contrive legal excuses to shield war criminals from prosecution, they should be able to come up with a procedure, which would pass constitutional muster, that'd simply allow the Treasury Secretary, under instructions issued by the President, to keep paying America's creditors regardless of cash on hand---and if the money's not there, well, tap the Fed balance sheet, or simply print more money. But what about the markets? Well, what about them? Most job creators only really start freaking out about shit if their invoices go unpaid, so as long an Uncle Sam keeps meeting its short-term obligations, the markets aren't going to care one way or another about the deficit. Given the way they've behaved every time we've issued more debt recently, I'd be willing to bet they'll do the same exact thing next time---buy up more Treasuries at near-zero interest because they know it's still just about the safest investment on the planet.
Put another way: The Serious Persons in Washington who claim to care about reducing the deficit to "ease market uncertainty" or "avoid financial armageddon" are people who either (a) don't know what the hell they're talking about, or (b) sociopaths who want us to suffer, because the doom and gloom they consistently predict is never going to happen.
---Vitelius
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