US Debt Ceiling Increase Denied While Concerns Heighten
This past Tuesday, Congress voted to not raise the debt ceiling for the United States. While many are not sure what impact this might have on the US economy in the long run, the short term obligations of the US on an international scale could see some dramatic repercussions. The Republican controlled House denied the passage with an overwhelming majority voting “Nay” on the proposal to increase the US debt ceiling by another $2 trillion.
When dealing with an existing US debt of over $14 trillion and a total of as much as $200 trillion when unfunded liabilities are factored in, most people in the US tend to get glossy eyed and move on. The amounts are so large that most people simply cannot comprehend the amount of money the US owes to other nations around the world.
To help in understanding what these numbers mean, consider the following analogy in units of time.
One million seconds is the equivalent of eleven days, one billion seconds is the equivalent of thirty-one years, and one trillion seconds is the equivalent of thirty-one thousand years. If one does the math, just to pay off the existing $14 trillion the US owes, it would take four-hundred and thirty-four thousand years.
While some might say that denying an increase in the existing debt ceiling by a mere $2 trillion is akin to throwing a deck chair off the Titanic to help keep it from sinking, others will say that it is the only responsible thing to do. When a country cannot live within its means, and has no way of paying back its debt within any reasonable time, the international community is likely to start cashing out of US dollars.
If the US losses its current position as the world’s reserve currency, then hyperinflation rivaling that of the Weimar Republic in the 1920’s is likely to ensue. Time will tell what the condition of the US as the international financial powerhouse will be.
