United States of America is about to run out of overdraft. LOL

[tolbiny]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
That's not what that means. "full faith and credit" is government speak for "My word is my bond". Isn't your word valuable to you?

[/ QUOTE ]

No, that's not what they are saying. They are saying that the ability to increase their level of debt is an asset. My word is only an asset if I can keep it, it is a liability when I cannot keep it. I don't increase the value of my word by increasing the number of times I borrow money, I decrease it by making it harder to pay back my initial promises as well as the new promises.

[/ QUOTE ]

I don't know exactly what this means, but I don't see how you could argue that the ability to borrow $9 trillion at 4.5% in your own currency is anything but a gigantic asset.

[/ QUOTE ]

You borrow $100 from me, I estimate a very high chance of you paying it back.
You now borrow an additional $100 from Borodog, I have to lower my estimation that you will be able to pay it back.
PVN steps up and lends you another $100, both Boro and I lower our expectations of being paid back.
You then announce that you wish to borrow $300 more dollars, B, P and I all devalue the likely hood of you paying us back further. This is what raising the cap is, the government is saying that it INTENDS to borrow more than 9 trillion, not that banks/individuals/foreign governments want to LEND us more money.

[tolbiny]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
That's not what that means. "full faith and credit" is government speak for "My word is my bond". Isn't your word valuable to you?

[/ QUOTE ]

No, that's not what they are saying. They are saying that the ability to increase their level of debt is an asset. My word is only an asset if I can keep it, it is a liability when I cannot keep it. I don't increase the value of my word by increasing the number of times I borrow money, I decrease it by making it harder to pay back my initial promises as well as the new promises.

[/ QUOTE ]

I don't know exactly what this means, but I don't see how you could argue that the ability to borrow $9 trillion at 4.5% in your own currency is anything but a gigantic asset.

[/ QUOTE ]

You borrow $100 from me, I estimate a very high chance of you paying it back.
You now borrow an additional $100 from Borodog, I have to lower my estimation that you will be able to pay it back.
PVN steps up and lends you another $100, both Boro and I lower our expectations of being paid back.
You then announce that you wish to borrow $300 more dollars, B, P and I all devalue the likely hood of you paying us back further. This is what raising the cap is, the government is saying that it INTENDS to borrow more than 9 trillion, not that banks/individuals/foreign governments want to LEND us more money.

[/ QUOTE ]

I want to clarify a bit more on this subject. The US government is going to increase its debt level in an effort to pay off current expenses/obligations. In no situation readily imaginable would this be considered a positive for the credit worthiness of the borrower. These actions can only realistically be viewed as harming the "full faith and credit" of the US Gov, and yet the person quoted is trying to sell it as increasing the value of an asset. It is rediculous circular speaking.

"we need to borrow more money to pay of the money we owe now, or else we won't be able to borrow more money so that we can continue paying our debts with borrowed cash"

[morphball]

Full faith and credit...

It's close to certain that the government will not be able to meet all of its obligations if things continue on their present course.

They will pay the coupons on bonds, but the other stuff they will do is:

1. Degrade the currency so payments are easier to make and the lenders get screwed - i.e., a dollar crash which may have already started

2. Cut back on obligations to its citizens like social security.

Now the government can always raise income taxes right? Wrong, the country has a negative savings rate at the moment, which means that our future gross domestic income can expect to be lower.

Good game they have been playing with our country, no?