July 28th, 2011 11:23 AM by Gregg Mower
The question arises will interest rate rise if; 1 they miss the deadline and; 2 if they actually raise the debt limit?
Answer is NO on both accounts as we are in recession and the raising of interest rates will just further deepen the current situation.
This is just a political ploy to get the American people to stand up and make congress and the Executive branch get the limit raised. Politically speaking it does no good for both side of the isle not raise the ceiling as in the short term government jobs will be salvaged and the possibility of reelection in 2012 will be great for all.
The real problem, that no one wants to address, is the long term effects of continually raising the debt ceiling. Most Americans live in the here and now and pay no attention to the future as evidenced by the way a great majority of americans treat their own personal credit and spending. What is being missed is the fact that the government is borrowing money on a credit card with nothing backing up the debt other than "good faith" and the belief of others that the government is "good for it". At what point do the creditors call the American debt due and payable and what will happen? This is the truly scary thought.
Historically, America had something like Gold or Silver backing our money and our debt so you could actually trade your dollars for Gold or Silver. In today's world if you look at a dollar bill you will see right across the top Federal Reserve Note, thus every dollar printed is actually debt the government has no means of repaying and We the People accept this. Unless, We the People take the hit sooner than later we WILL BE in trouble in the world wide devaluing of the dollar and thus we will be hit with inflation of goods and services not due to demand and supply but due to loss of "good faith" of the United States. This is why you see gold and silver at record highs, as tangible assets are the hedge to inflation. Real Estate will also be a hedge as it too has value.
The government could fix this mess and this future mess by moving towards a new asset standard. I would propose Real Estate as the new asset standard, as the government holdings in Real Estate is large with BLM land, National Parks, Buildings, and the take over of the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corp. (FHLMC). This could back the dollar and the debt. Coupled with a total reduction of Government agencies, entitlement programs, subsides act. We are Americans and We the People have always made America great but creating a society that is dependant upon the doings of Government is a recipe for disaster. Look at Greece, Portugal and other countries that have had run away government services and entitlements they are broke. We can make this better if we just get back to our roots of rewarding those who work hard and contribute to society and don't expect to be bailed out, or helped by the government when things get bad. We are Americans!