Please note that the post below was published more than ten year ago on 21st November 2009 Nick Herbert MP, shadow cabinet member for the Environment, Food, and Rural Affairs, was in Cumbria this morning to see the areas affected by the flooding. He writes on Conservative Home about his visit. Here is an extract. I’ve been in Cumbria today to see the areas affected by the floods. I arrived early in Keswick where I met officials from the Environment Agency. Although the river levels had fallen considerably and homes were no longer flooded, the damage to homes had been done. And the water which had got into houses wasn’t just from the river – it was foul water which had risen from the drains. I talked to fire crews who were pumping flood water back into the river, and discovered that they were from Tyne & Wear and Lancashire. They had been called in at an hours’ notice and had been working on the scene ever since, staying at a local hotel. You cannot fail to be impressed by the
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Raising the debt ceiling, which has been done over 100 times, does not increase our debt. It does not somehow promote profligacy. All it does is it says, you have got to pay the bills you have already racked up, congress"
It may be necessary for them to increase the debt ceiling, but how a sane person can argue that this doesn't mean you are going at least temporarily to increase your debt is beyond me.
I mean Raising the debt ceiling, which has been done over 100 times, does not increase our debt.
- What? That’s exactly what it does, well ok it does not in itself, but by its very nature, and the only reason you would ever want to is so the US government can borrow more money. Thus increase the debt. Whilst you could state a case that it wont increase the deficit (which it wont) there is no way you could ever argue that it wont increase the debt.
There are even some who are stating that the debt ceiling should be raised every time its approached with out requiring even a discussion in congress. Well if that’s the case then why have it at all? Its function is to bring to attention the level of debt, and ensure a debate on the debt level in congress.
All it does is it says, you have got to pay the bills you have already racked up, congress
Erm, well if you consider paying off a Visa card with a master card as paying bills then yeah. But in reality by borrowing to afford to service debt is not paying bills, it’s the exact opposite, it’s a way of not paying bills, its just increasing the size of the bill that will eventually need to be paid. Bernard Madoff would be proud, although having said that perhaps he would not. You see Bernard Madoff knows his stuff on Ponzi Schemes. The line from Obama basically says if we cant borrow more money then we will be forced to default on the debt we currently have. So you have just told any would be investors that you are in fact running a ponzi scheme, Bernard would not be so impressed at this part, he would tell you that informing would be investors you are running such a scheme is a very bad idea, you should at least pretend that its going to be temporary, and you have a cunning plan for the economy to grow or the tax take to increase, not openly state you have already failed to make this promise over 100 times,
This I think will highlight where the problem really comes, its not so much hitting the debt ceiling, its hitting the lending ceiling, without other people buying US treasurys the only option is to fire up the speed of Bernake’s (soon to be Yellons) printer. Thus default in a different way, though either way its still default and wont end well.
It's an absolutely classic example of the mindset which got most of the Western World into the present fiscal and debt mess.