Default Ceiling



Bill McBride decided to publish a blog post he wrote, but shelved, in 2014. It may be an "old" post, but it is as timely as ever:

As far as the "debt ceiling", the "debt ceiling" sounds virtuous, when, in reality, the vote is about whether or not to the pay the bills - and not paying the bills is reckless and irresponsible. The "debt ceiling" is redundant (once a budget or a continuing resolution is passed, then the impact on the debt is pretty much known). This is like someone not paying their credit card bill to teach themselves not to use so much credit! Irresponsible.

I prefer the term "default ceiling" because that is what it is.

He's right, you know. Refusing to pay debts is irresponsible, and there is a reason why lenders are reluctant to loan money to anyone who defaults on their debt obligations, whether they're individuals, businesses, or nations. A lot of folks in the US probably have long forgotten the last time the US came dangerously close to defaulting. In this case, our collective short memories help some small faction hurt us all.

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