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News Link • Government Debt & Financing

Senate Republicans Considering Back-Door Debt Ceiling Increase

Senate Minority Leader Mitch McConnell (R-KY) proposed a "contingency" plan for raising the debt ceiling Tuesday afternoon. Saying the "Senate will absolutely not be a party to a default," McConnell described a procedure allowing Obama to formally request a debt ceiling increase, for Congress to consider with a "motion to disapprove." Only one-third-plus-one votes in the both houses would be needed to raise the debt limit under the plan. McConnell said spending cuts would not necessarily be a part of the deal, which would raise the debt ceiling by $2.5 trillion in three tranches before the 2012 election.

1 Comments in Response to

Comment by Ed Price
Entered on:

When something is so out-of-whack that you can't do anything about it, you might laugh. You wouldn't be laughing because of some hidden humor, but because if you didn't laugh, you might become bitter.

What is laughable in this case is that originally, all the money that makes up the debt was borrowed from the Federal Reserve Bank. Government might be able to repay the money... somehow. But, since the Fed took over the money, there is NO other source of original funding, except to borrow it from the Fed.

So, guess where the Government gets the interest they pay on the money they have borrowed. Where exactly does the interest money come from? Doesn't it come from another loan of original money from the Fed? Since that is the only source of original money?

Laughable, isn't it? And all the more so because the Fed simply creates the money out of thin air... either by printing it, or by some entries in their ledgers, or both.

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