Lead into yesterday's letter from American Historian Heather Cox Richardson, click link to see full letter:
 | Today, the Senate considered a bill to fund the government until December and to raise the debt ceiling. The Republicans joined together to filibuster it. Such a move is extraordinary. Not only did the Republicans vote against a measure that would keep the government operating and keep it from defaulting on its debt—debt incurred before Biden took office—but they actually filibustered it, meaning it could not pass with a simple majority vote. The Republicans will demand 60 votes to pass the measure in the hope of forcing Democrats to pass it themselves, alone, under the system of budget reconciliation. |
sloanbashinsky@yahoo.com
This Independent wonders if, or when, Uncle Sam not having to live within his means will finally catch up with him?
Every state, county and city government in America have to live within their means. Every school district, water and sewer district, etc. have to live within their means. Every profit and non-profit corporation, every church, every college, etc. have to live within their means.
Even the FDIC has to live within its means. According to a legal opinion by Counsel, the FDIC is not actually backed by the full faith and credit of the United States government, but is backed by resolutions of Congress which are not legally binding:
https://www.fdic.gov/regulations/laws/rules/4000-2660.html
Fortunately, the FDIC has been managed well, and, based on what I also read today online, not one depositor in an FDIC insured bank has lost one penny.
Unfortunately, every time the U.S. Government increases its debt without increasing its revenues, the effect is it prints more money, which decreases the value of the dollar.
That's not really true, all of the entities you mentioned incur debts, as do most individuals. The wealthy live on loans taken out against their stock holdings so that they don't have to pay taxes when they sell the stocks. The world economy revolves around debt.
Unlike personal debt, the government borrowing money is not necessarily a bad thing, especially when interest rates are low. It facilitates the implementation of large programs.
I agree debt is not necessarily a bad thing, and it is commonly done. However, the way the US Government borrows is different from the way city, county and state governments and the private sector borrow. If they can't pay their debts, they go bankrupt. No so, Uncle Sam. He just keeps printing money.
Just after replying to you, I received a call from a friend who once was a professor of economics in a couple of colleges. He said it is exactly as I explained it in my comment and my reply to you, and the Federal Reserve makes it legal. Legal counterfeiting, I asked? Yes, he said.
I once was a tax lawyer. Borrowing money does not get people out of paying their taxes, but it might enable them to pay their taxes. Then, are those who use tax lawyers and other methods to get out of paying their taxes. Donald Trump's claim in 2015 and 2016 and thereafter, that he couldn't reveal his tax returns because he was being audited by the IRS was pure B.S. The IRS had no objection to the public seeing his tax returns.