The Debt Ceiling Should Be Raised

The last thing you are probably expecting to hear from me is the debt ceiling should be raised. Well, it should be. The idea of going cold turkey on our debt at this moment is nonsensical.

What would a cold turkey cut off look like if we don’t raise the debt ceiling? A disaster. Government employees would be unpaid. Debts would go unpaid on treasuries and the like. The markets would boil and, most problematically, the bond market would start to question the safety of treasury notes. This would be a huge disaster.

If the bond market looses faith in United States treasury notes, we are screwed, blue and tattooed. The only way to entice them back would be to raise interest rates…a lot. This would add a huge cost to doing business for our government and would result in massive tax increases for you and me while spending would be slashed. This is what needs to happen in the long run, but doing it in the short term would be a disaster.

So, what happens if we do raise the debt ceiling? Well, we’ll add more debt. The figures however are small compared to the overall situation – maybe a few trillion dollars. It should be said that it is fairly sad that we can now say a few trillion dollars is a small number, but there you are.  In this case, it is something that should be done.

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