Thoughts On the Debt Ceiling and Running Out of Money

george grombacher 0:02
Do you remember running out of money? Back in the day, time before credit cards before unlimited spending? Can you remember when you ran out of cash? What happened? Odds are you stopped spending money, you stopped buying stuff you stopped consuming. It just ended fun was over. What happened to that? Well, credit cards, credit happened to that borrowing happened to that. So those showed up. And that meant I couldn’t run out of money could just blow past being broke, and just pile on the debt. And believe it or not, while that seems like a good idea, it’s really not a very good idea. It’s a recipe for getting ourselves into debt, getting ourselves into financial trouble. And I speak from absolute experience on this. I remember a time where I didn’t know if I had any money until I went to the ATM machine before online banking where I would, it was like a surprise. It’s like a drumroll. I get this little printout from the ATM and it said you have eight cents. Oh no, I’m broke. Alright, $200, I’m like, I’m rich, let’s go. It’d be a great night. You remember that? Maybe you don’t, I’m 44. Like many of you are considerably younger than I am, which is awesome. And bad because you don’t remember running out of money. And you’ve only been during a live during this time where we have ubiquitous and instant access to our balances and our accounts and stuff like that. And if you were somebody like me, who certainly was not balancing a checkbook, certainly not keeping up budget, certainly not tracking cash flow. It was just, it was just, you would find out if you had money when you went to that ATM or actually went to the bank or something like that. But I tell you what, everything going on in the world, and there is a lot going on in the world every day, it’s some new thing. It’s amazing. The speed at which stuff changes, and the amount of crap that is coming our way all the time, and demanding our attention and overwhelming us, quite frankly, I don’t know how you don’t feel like your head is swimming or you’re overwhelmed. But what’s true is true. And common sense. While it appears to not be very common, is still it’s still really wins the day. You don’t need to be an economist to truly make heads and tails. But what’s going on, and I want to talk about the debt ceiling today. And I think that not being an economist or not being a trained economist, is in many ways a benefit. But I’ll let you make your own determination on that what is required is common sense, what is required is the ability to think all the way through a problem critically. So if we are able to do that, if we’re able to apply common sense, and use critical thinking, I’m confident that we can come to a conclusion as to what the correct path forward is. Have you ever gone to US debt clock.org? If you’re gone to that website, if you haven’t, you’re welcome. And or I’m sorry, go to US debt clock.org. Check it out. It’s a fascinating one screen site that shows you all of our debt, just like it sounds, US debt clock.org. It shows all of our spending, and it does it in real time. So there’s so much going on. It’s like the screen is pulsing. Just it’s the router and spoiler alert, we’ve got a lot of debt, and it’s going up really, really really fast. Is that a big deal? Is that something to be concerned with? Depends who you talk to depends what economist that you were talking to, and I’m gonna get into that in just a second. But what brings me here, what brings us here is the debt ceiling. Democrats appear to want to raise the debt ceiling. Republicans appear to want to not raise the debt ceiling. And I’m disinterested in having a conversation about Democrat and Republican because I just I do I don’t, I don’t care. What your political party affiliation is. What I care about, is having a country that I can continue to live and be successful in, and a country that my children and their children and their children’s children will continue to be successful in. Going back to the common sense thing, so because I’m not smart enough, I am not a trained economist, which, if you paid attention to me at all, is blatantly obvious. So I’m going to read to you what the debt ceiling is. The debt ceiling, also known as the debt limit is a statutory limit imposed by the government on the amount of debt it can incur. It is the maximum amount of money that the government can borrow to fund its operations and meet its financial obligations. In the United States. It’s set by Congress, it represents the total amount of debt that the US Department of the Treasury is authorized to issue is typically expressed as $1 amount, the debt ceiling serves as a legal barrier that prevents the government from exceeding a certain level of debt. without congressional approval. That’s an important thing. When the government reaches the debt ceiling, it cannot borrow any more money to finance its activities until Congress raises or suspends this limit. If the debt limit is not increased, or suspended, and the government is unable to meet its financial obligations, it may lead to a government shutdown or a default on its debt payments. Is that good about? Well, it’s bad for any entity, any one individual governments or whatever to default on its obligations. Kinda like at the beginning, when I talked about do you remember running out of money? What did you do? You stopped spending money? What do we do? Oh, we can’t stop spending money. When I say we, I mean, the government. We can’t stop spending money. We just what? What can we do? Oh, my gosh, we certainly can’t stop spending. Oh, let’s just get rid of the limit. Let’s take out a new credit card. That’s essentially what we’re doing. Let’s open a new credit card. We’ll worry about this later. We’ll we’ll we’ll let the next administration worry about it. We certainly don’t want to lose votes by doing something unpopular. That might be the right thing to do. No. Preposterous. Let’s not do the right thing. Let’s just keep kicking the can down the road, and keep piling on more and more debt and making it harder and harder to ever dig out of it. How does any of that makes sense? Does that make sense to you? Or do we need to nip this in the bud say, Okay, stop. Stop, enough. How do we get here? How does any of this make sense? Well, let’s go back to the smart people in the room. Let’s go back to our economists and a certain kind of account because lots of different kinds of lots of different kinds of economics, lots of different approaches. But this one’s great. It’s called Modern monetary theory. And again, I apologize for reading, I am not smart enough to be able to tell you what this what this is simply so I’m just going to read you a little bit about it. Modern monetary theory MMT is an economic theory that challenges traditional views on government spending, budget deficits and monetary policy. It challenges the conventional views and says, I see what you’re doing with you’re not spending money you don’t have. Well, I would like to spend more money. Therefore, I’m going to create a new theory. Here we are, and emphasize the role of sovereign currency issuing governments in controlling their own economies and assets that such governments can create and spend money without relying on taxes or borrowing. Okay, let’s just create more money. Currency sovereignty. MMT argues that a government that issues its own currency, like the United States, and the dollar has the power to create and control its money supply. This gives the government more flexibility in financing and spending. Smart functional finance MMT suggests the primary goal of fiscal policy should be to achieve full employment and price stability rather than focusing solely on balancing the budget. Yeah, I mean, balancing the budget. That’s so basic. That’s for chumps. Now, we want to do all this other stuff. Theory advocates for using government spending and taxation and manage aggregate demand to the economy. job guarantee. MMT proposes the

implementation of a job guarantee program. This is a way to achieve full employment and address the issue of involuntary unemployment. Okay, wow. That’s interesting. deficits and debt MMT challenges the traditional notion that Government budget deficits are inherently bad. Yeah, this isn’t bad. That US debt clock thing we’re talking about. Don’t even worry about it. We’ll just keep, we’ll just keep chugging all systems go. It argues that as long as this country has its own sovereign currency and does not rely on foreign borrowing, deficits can be sustainable. But that’s not us. That’s not the United States. We borrow money like crazy MMT views government debt as the private sector savings and emphasize that the focus should be on managing inflation. Hmm. Yeah. Finally, monetary operations. MMT highlights the operational aspects of monetary policy emphasizing that central banks primarily control interest rates through their actions in the money markets. It argues that the idea of a government running out of money is a misconception, since the government can always create more money. What does that sound like to you? Does this make sense to you? What if you did that? What if you and your household operated like this? Would you be financially successful? Would you be? Is that sustainable? The answer is clearly no. Common sense says no. What is your common sense? What? What were your emotions? What were your thoughts as I was reading those? Does that make any sense to you? Or is that? Or or perhaps doesn’t it? Now, as I say that, I know that there’s people out there that really do believe it? Or do they believe it? I don’t know. I don’t know. So anyway, modern monetary theory. It just it just fundamentally doesn’t make sense to me. So what do we do about this? We’re gonna find out what what our government decides to do with this, how they decide to move forward. There is a Wall Street Journal article that I will put in the notes that talked about how the Biden administration is considering utilizing the 14th Amendment as a way to bypass Congress and increase more suspended debt ceiling. Another name for that is the Biden Administration, has made the decision to rearrange deck chairs on the Titanic. So because I’ve been reading today, and because you love hearing the sound of my voice, I’m going to I believe this is the last time I’m going to know maybe not the 14th 14th amendment. There’s a couple of important things about the 14th amendment. Fundamentally, the 14th Amendment is deals with equal protection under the law, it is there to create or to protect the rights of citizens. But it also says in section four of the 14th Amendment, that the validity of validity Validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any state shall assume or pay any debt or obligation, incur incurred in aid of insurrection or rebellion against the United States, or any claim for the loss of emancipation of any slave. But all such debts, obligations and claims should be held illegal and void. So there’s a section that talks about the validity of the public debt of the United States, which they are exploring as a workaround to the debt ceiling problem that they are incurred, that they are experiencing, Section Five says The Congress shall have power to enforce by appropriate legislation, the provisions of the article. There’s also a quote in that journal piece from Joe Biden, he says, I think we have the power to do it. Okay. So he thinks, based on his reading, his interpretation or somebody in his administration’s reading and interpretation, that they’ll be able to use this to circumvent the process, and instead of having Congress approve it, or whatever, that he is able to do this. And I think that this is a glowing example, a perfect example of why the United States government has three has three branches. And what you already know, that can Congress, legislative or rather Congress, which is the House of Representatives, United States Senate, the executive Just the president knighted states and then the the judiciary. So why those are there is to theoretically speaking, prevent one person in this example the president knighted states from doing whatever he or she desires. So anyway, sorry for all the reading. But I think it’s really, really important to kind of contextualize all of this. And to again, use common sense. Do you think that the 14th Amendment is in place to do something like this? I don’t know. I, if President Biden does opt to go this route route, I hope that that our courts have an opportunity to to hear it. And if they decide that it’s that all systems are go and that it’s okay to use the 14th amendment to read to raise or suspend the debt ceiling will then by all means, we have to trust in the process. And this is an example of that. So debt ceiling, modern monetary theory. Common sense, the reality of it is that you and I have finite money, you and I have finite resources, you have only so much time in the day, you only have so much tension, you have so much energy, you have so much money. So therefore, because we have finite resources, we must make good decisions about how we allocate these. When we run out of money. When we maxed our credit cards, it’s the end of the rope. It’s the end of the line, when you start making decisions. And one day, we will wake up each of us this is me, too. And you’ll say, Okay, enough is enough. This is not sustainable. I cannot live like this anymore. I am not getting where I want to go, the choices I make have made are no longer serving me. So what do we do? We make other choices. We make tough decisions. There’s something called austerity measures. And what are stairs, what austerity measures are and they’ve been going on throughout the course of time. It’s just it’s, it’s, it’s it’s making tough decisions. It’s trimming back our spending. It’s cutting back spending and stopping spending in certain areas. Certain austerity measures that you must do as individual that your family must do, that your community that your town, your city, your state, your country, must engage in to stop the bleeding, stop the hemorrhaging something that we, as the citizens of the United States of America, I believe, must insist that we become better stewards, that our federal government becomes better stewards of our tax dollars. And they stop creating new currency out of thin air. Because it is not a sustainable, it’s not sustainable. It’s not a good future for us. We’re already seeing it. We’re seeing the problems, inflation, banking, and it’s just tip of the iceberg. I think a lot of the problems that we’re seeing are just getting started. And there’s a lot of stuff that we have no idea about. So there are no solutions. There are only trade offs. When you say yes to one thing you are saying no to everything else. Use your common sense. Use your critical thinking skills, check out the debt, clock, US debt clock.org. Reach out to your elected officials, your representatives and say, Hey, enough is enough. I don’t want to see the debt ceiling raised. We need to take our medicine, we need to push back from the table. We’re done eating. I need to go on a diet. I’m unhealthy. I’m fat. I feel like shit, and look like shit. I don’t have any energy. We’re broke. We can keep printing money and pretending like we’re not. But that’s a literal ticking time bomb. There is language in there about sovereignty. Well, sovereignty means that you stand on your own two feet. You’re independent, you’re autonomous. And we’re drowning in debt, and we’re drowning in the debt of other countries and nations. We’re not independent, we’re not sovereign, we can be again, you need to start getting your act together. Start to unite at home starts with you and I’m making good decisions. It

starts with you and I advocating for what we believe to be correct and speaking up and saying enough is enough. Reach out to your elected representatives at the state level, reach out to your elected representatives at the federal level and tell them Hey, enough is enough. We’re not going to raise the debt ceiling. You need to figure this out. out we need to find another way forward, not just a blank check and unlimited spending that goes and just continues to erode what is most important to us and our our and our autonomy. All right, so there it is. You remember running out of money. This problem of credit, it’s true for you and I as individuals as families, and it’s true for the federal government too. So as always, do your part by doing your best

Transcribed by https://otter.ai