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In Response to Re: GOP Filibusters Debt Limit Hike:
Avoiding Default does not require hiking the debt ceiling. Just paying minimal interest & principal. There is no compelling reason to increase the debt.
Posted by Journey56
Avoiding Default does not require hiking the debt ceiling. Just paying minimal interest & principal.
Our national debt is not credit card debt. It is bond debt. Interest on those bonds is paid in cash each quarter. Our fed sells bonds to get that cash.
If our Congressional Republicans do not raise that debt limit, our fed will not be able to sell bonds to get that cash. Without that cash, it will no be able to pay bondholders what they are owed.
If they don’t get paid, no one will buy our fed bonds.
If that happens, our Congress won’t have any borrowed dollars for spending. It will only have revenue dollars to do that.
If that happens, “all things” our federal budget will be revenue things. We all know what those Congressional Republicans think of that. You would think one of them would connect those dots.
Default is: No one will buy our fed bonds. That would jam fiscal discipline back into the Republican Party. Unfortunately, we cannot do it because it would also set into motion a cascading series of economic collapses that would be worse than the depression. Then, cash from fed bond sales was used to do something about that.