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Let it Burn

Image courtesy of forbes.com

Image courtesy of forbes.com


Debt:  16.7 trillion and counting.   Ceiling:  About to be reached.   Default:  Activate Global Panic!

It is coming to the end.  Comet ISON is on its way. We are all going to drown in a world market tsunami that will make the GFC look like a bubble in the bathtub.  The 41% of Americans who thought it’s better to build a bunker than a retirement fund were right!

The impending debt ceiling catastrophe comes from the fact that America’s income only covers $0.60 of every $1.00 spent.  So America needs to borrow 40% of what it is spending just to keep the engine running.  Enter the Tea-party.

With their military pork, farm subsidies, tax cuts and hatred for health care these founding-father fundamentalists are committed in the crusade to prevent the Obamaclypse.  And the debt ceiling is just the spanner they were looking for.  Ask not why it is more important to stop a free market in private health insurance than it is to have a functioning government, the path to hell is paved with logical thinking.  This fight is about faith, true belief, and stopping big government from helping those who should be helping themselves.  Like Jesus told Republican Senator Ted Cruz “get up, brush yourself off, go into town and get a job”.

Self saviour is the American way, and government should stay out of it.  We can take a lesson from these great world leaders; these inventors of liberty, these founders of democracy.  These great guardians of the American language are showing us the way to freedom, and their message is simple.

Let it burn.

Default is the most popular word in the news today.  The IPCC has put the kybosh on the world ending next week via climate change, so now we have to be terrified by something new.  Something that has NEVER HAPPENED BEFORE . . .

Actually it has.  America has a great history of bilking its investors.

You may remember that little episode in the 1770’s the Americans like to call the War of Independence.  The French government almost went bankrupt funding Washington and his buddies as a way of distracting the British.  The French figured that the colonial side-show would help them in their effort to crush the growing English empire, and the resulting trade with the colonists would refill the coffers.  The American colonies won, but France lost their Caribbean holdings and Canada.  Then after the war the newly minted Americans figured they would keep on trading with their British ex-evil overlords instead of their French saviours.  France went broke and collapsed into the French Revolution a few years later.

Even the great Roosevelt dropped the bomb, on his own people!  By not paying back money owed on Treasury bonds that were sold to support the war effort in 1917.  Then there are all those times in South America, Cuba and Vietnam where the Yankees have cut and run leaving dry cleaning and drink tabs unpaid.  And let’s not forget that the entire GFC was made possible by Americans failing to pay their sub-prime mortgages.

So now we know that America is a bad debtor, but like a 90’s Dot-com executive they keep on borrowing money and spending on the next big fad.  Under Reagan it was Ray Guns, under George H.W. it was war and under plain old George W. It was two wars.  Though it seems no one is barracking for Obamacare.

What about the rest of us?

Big thing to remember is that America can not default on foreign loans.  Servicing debts is not optional.  Treasury needs to keep creditors trusting in the “full faith and credit” of the U.S. of A.

The debt ceiling only stops America from borrowing more money; it does not stop them from paying it back.

In world GDP terms America only makes up 14-15% of the world economy, and in 2012 they bought a stingy $9.5 billion of Australian goods; coming in at a distant No. 5 behind China, Japan, Korea, and India.  They are no longer the well-fed rich kid we need to be friends with to play with the latest toys, they’re just well-fed.

There won’t be a run on the market either.  No one will be dumping US debt and running away because most of America’s debt is held by Asia and oil-rich Middle Eastern states who have a vested interest in keeping America right where it is.  More than 60% of the $5 trillion that Asian central banks hold is in U.S. bonds and stocks. They don’t have a choice.  They have to keep the investment because the alternative chaos would be considerably more costly.

This means it is mainly Americans who are going to enjoy the trickle-down from roughly $600 billion being withdrawn from their economy.  Federal employees, veterans, teachers, and pensioners can take a pay-cut; they are just leaching off the system anyway.  Small government is just a couple of million pink slips away.  Sure there will be a lot of unhappy people, but the grown-ups in Congress can keep funding for law enforcement, or maybe they can privatise it to make it more efficient.

Remember this is America we are talking about, the markets will provide.  If Jesus says you can get up and get a job, then by golly you can. Jesus is about self-saviour, so just push granny out of the way and remember to grab some low-calorie beer on your way to the bunker.

Days of blunder

Fear and loathing rules in Washington, and it has recently been demonstrated that Americans are unaware that ‘Obamacare’ and The Affordable Care Act is actually the same thing.  In this harsh light of ignorance some see hitting the debt ceiling as the only way of getting america to rein in its expanding waistline.

Failure has a wonderful way teaching us life skills, and sometimes a child needs to be allowed to learn a painful lesson.  While decreased government and consumer spending in America will hurt the rest of the world, it is going to hurt Americans a lot more. Maybe once they start missing out on a piece of the pie Americans will start taking a harder look at national pork-barrel programs.

So let it burn.  Maybe a USA living within its means, instead of high as a kite on debt-leveraged high-fructose corn syrup is just what we need.  We should be praying that America stops borrowing.  Doesn’t that mean there will be more for everyone else?  Without the fat kid in the corner gobbling up all the jam donuts maybe the rest of us will be able to enjoy our coffee break and socialised medicine in peace.

TJ Curtis


TJ Curtis is a writer and designer who thinks a good recipe for society is tolerance blended with irreverent wit, rational thinking and passionate argument, set to simmer and seasoned to taste.

His many Brilliant careers include illustrator, cook, infrastructure manager, teacher, fashion buyer, butcher, designer, and writer.

History and social impacts of government policy are fertile ground for a humorist, and TJ takes the big picture and squeezes to see if anything enlightening comes out.  When it does he writes it down so that others can share, or at least be entertained.

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  1. mikestasse

    Servicing debts is not optional.

    Well that depends……… at current record low interest rates, the US government already spends ~25% of its income. But should interest rates rise by JUST 1%….. that 25% becomes 50%. Raise it some more….. and it’s game over.

    The vast majority of people do not understand where their money comes from. Rather than me reinventing the wheel, take some time to do “The Crash Course”. Put together by Chris Martenson (http://www.peakprosperity.com/about) this series of presentations will give you a totally fresh understanding of WHY it’s not just the US that’s screwed….. it’s the entire Capitalist system. It takes three hours to do the entire course, and I’ve seen it maybe six times (I’ve presented it several times in Australia), but make no mistake, it’ll be the best investment of your time, EVER……

    The point is……… DEFAULT is the default outcome. One day, ALL debts will be cancelled, because there is NO WAY they will or can be, ever repaid.

  2. Roswell

    The media is trying to tell us that the world is going into free fall in a few days if this isn’t sorted out.

    The situation is serious, but never as serious as the media tell us.

  3. John.R.

    The US spends $ i.50 for every $1.00 of taxes raised.The world is ceasing to buy US debt so of the $ 85 Billion a month in QE ? $ 45 Billion a month is for buying US Govt bonds. The Govt does not set real interest rates,markets do and when they default and they will, up will go rates and down will come the house of cards masquerading as a financial system. Not just in the US but globally. Buy Gold

  4. Deborah Harris

    Good article by TJ. Funny as well. Will go and have a read of ‘peakprosperity’ mikestasse, thanks.

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