The United States Debt Limit Explained
Uploaded on Feb 26, 2011: What’s happening as the congress raises the debt ceiling explained in a very easy to understand and short video. Congress will consider raising the debt ceiling on our borrowing streak for the 78th time in less than a hundred years and as the debt goes up so does the interest on the debt.
No one in their right mind would do this, but Congress does because it’s not their personal money or debt and it allows them to continue to spend and remain in power.
Update: This video was made before the debt ceiling was raised two years ago. The USA debt ceiling is scheduled to rise again soon for the 79th time.
Comments
excellent and simple explanation of indebtedness…
would have liked it to carry on so now I will “speculate” realisticly…
Obviously interest rates must rise to offset indebtedness.
This will affect “take home pay” for the employed/taxpayers.
As an ex tradeunionist I support full employment ..and may also add
“sustainable” full employment.
More people working and paying their taxes reduces the burden of state.
TAXES becomes the weapon of mass distribution of wealth.
What offends me is the wasteful spending of TAX payers money
by politicians on projects that are counter productive/uneconomical.
Also making of laws that discourages innovation/job creation.
Also may add here passing of laws that are unenforceable (wasted
parliamentary time)…
We elect our leaders for whatever reasons and should hold them accountable
to us or we vote them out. I support the democratic system of government.
Governments borrow money in the markets by offering 10-50 year bonds
to fund their administration/operational costs…the demand and supply
thesis determines the price…which can also be influenced by the political
situation of its borrowers.
They then lend money internally through their central banks(fed usa)….using interest rates to control inflationary ups and downs….they can also print more
money to control the money supply…..now referred to as QE (quantative easing)
I do not “forecast or speculate” on future interest rates as central banks have
the power to raise or lower interest rates….get it right and we all benefit
internally/externally…get it wrong and our currency becomes less valueable externally.
zimbawee dollar a good example of absolute failure.
equador another country where USD is used as legal/common tender.
the populace decided that their currency was worthless and opt to use
USD as legal tender.
GUYANA dollar was 4 dollars and 80 cents to the pound when I migrated to UK to join Royal Air Force back in 1962….today the GUYANA dollar is 316 (three hundred and sixteen dollars) to the pound.
What went wrong !!!?????
Most will have answers to that so will end here hoping that others can offer
their explanation which I will respond to at a later date.
Thanks to those who were able to read my comment to the question.
GUYANESE in heart GUYANESE in mind
GUYANA my soul.(beliefs)
thanks for your time
kamptan
It is a clear example of “How to get mired in debt without really thinking.”
However, running a Government is vastly different.
It started off (I suppose) with the idea that Government should do only those things which the citizens cannot do by (or for) themselves. National Defence, the Highway system, Police, Fire-fighting and Health services are easy examples.
You can almost hear Government askihg, “Out of Police, Fire fighting, and Public Works, which one do you want me to scale back to keep taxes from going up?” Recreation Services and Unemployment Compensation are two services that can be debatable. I believe that Disney can provide recreational facilities better than any Government agency can.
Government gets the money to pay for the services by taxing people.
People want more services for their taxes and so a vicious circle is set up.
Over the years,as taxes become burdensome, Government sells long term bonds etc. to raise money. The citizens see more and better services with little increase in taxes. Life is good!
When the time comes to repay, no one wants to make the necessary sacrifice; the name calling and finger pointing starts. And it might be a good political platform to win an election.
But you know what? The new Government will do just exactly the same.