We’re Already In Default On The National Debt

As a vote on raising the national debt cap looms, proponents of raising the cap tell us that we must raise it because if we don’t we’ll default on the national debt. But according to the Chinese, we’re already defaulting:

A Chinese ratings house has accused the United States of defaulting on its massive debt, state media said Friday, a day after Beijing urged Washington to put its fiscal house in order.

“In our opinion, the United States has already been defaulting,” Guan Jianzhong, president of Dagong Global Credit Rating Co. Ltd., the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying.

Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies — eroding the wealth of creditors including China, Guan said.

Guan did not immediately respond to AFP requests for comment.

The US government will run out of room to spend more on August 2 unless Congress bumps up the borrowing limit beyond $14.29 trillion — but Republicans are refusing to support such a move until a deficit cutting deal is reached.

Meanwhile, Democrats want another round of stimulus spending. To, you know, help the economy grow and stuff.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • syantiss

    And the German rating agency Feri announced a downgrade of US Bonds from AAA to AA. A full notch down…

    And so it begins…

  • syantiss
  • dalaibama

    Its sad to be right when what you did is predict the demise of the US as we know it.

    I’d rather be wrong.

     But I would like the long list of people who voted for Hussein. Just in case I meet one on the street sometime, I can kick them in the knee. 

  • Jamermorrow

    Debasing the currency is defaulting. If you own government bonds, treasuries, or dollars you better sell. People relying on the government for pensions are going to get wiped out. 

  • Caeslinger

    China can say that all they want, but they play their own games with their currency.  It’s one of the risks people take buying government bonds, that actual default, or in this case devaluation by the entity will take place.  We’ll pay dearly for it going forward because of this decision.  

    There’s many economists, and I support the view, that given the IMMEDIATE climate after the housing market collapse we had no choice but to do some of the Quanitative Easing that took place.  Some of the others because of massive ‘stimulus’ spending has been unfortunate and further mistakes.  

    What needs to be done, in conjunction with cuts in spending, are also cuts in regulation and codes that will make costs of business and therefore product costs fall in this country.  Environmentalists won’t like this, but if the country continues down the route its on, the resulting failure will be entirely much worse for the environment.  And I’m not talking completely rolling back to 50’s & 60’s air quality standards, but a moratorium on new regulations and stopping the ones that are do to start is a good place to start for business.  Cleaning up the tax code, simplifying it, would save businesses an enormous amount of time and money as well.

    • Brenarlo

      QE is disasterous.  Always is.

      • Caeslinger

        QE is a symptom.  Its disastrous because it a necessary step to prevent other solutions to a problem that would be much more disastrous (ie, letting AIG fail, run on banks, no credit, etc.)

        • syantiss

          Letting those banks, Et al, fail would have been hard, but far easier than what happens when the currency isn’t accepted in trade for goods.

        • Brenarlo

          So we have to do disastrous things to prevent possible disastrous things?

          That doesn’t make sense.

          • Caeslinger

            Really? So the fix of the mess we are in is NOT going to be painful and disastrous for some? 

            It’s called making tough choices.  

            Tell people who lose their jobs that that’s not a disastrous decision the company made, but it was for the betterment of the company.

          • http://flamemeister.com flamemeister

            No, disastrous things are being done to create further disasters.  Yes, it can make sense, depending on the goal.

  • JoZo

    We need to Nationalize the Federal Reserve!

  • sanity

    What I have a problem with is we are giving money to other nations that we do not have.

    The International Monetary Fund board has approved a $40 billion bailout for Greece, almost one year after the Senate rejected my amendment to prohibit the IMF from using U.S. taxpayer money to bailout foreign countries.

    Congress didn’t learn their lesson after the $700 billion failed bank bailout and let world leaders shake down U.S taxpayers for international bailout money at the G-20 conference in April 2009. G-20 Finance Ministers and Central Bank Governors asked the United States, the IMF’s largest contributor, for a whopping $108 billion to rescue bankers around the world and the Obama Administration quickly obliged.Rather than pass it as stand-alone legislation, President Obama asked Congress to fold the $108 billion into a war-spending bill to send money to our troops.

    …..

    Only one year later, the IMF is sending nearly $40 billion to bailout Greece, the biggest bailout the IMF has ever enacted.

    Right now, 17 percent of the IMF funding pool that the $40 billion bailout is being drawn from comes from U.S. taxpayers. If that ratio holds true, that means American taxpayers are paying for $6.8 billion of the Greek bailout. Although the $108 billion extra that Congress approved for the IMF in 2009 hasn’t yet gone into effect, you can bet that once it does Greek bankers will come to the IMF again with their hat in hand. And, if other European Union countries see free money up for grabs they could ask the IMF for bailouts when they get into trouble, too. If we’ve learned anything from the Wall Street bailouts it’s that just one bailout is never enough.

    To hide the bailout from Americans already angry with the $700 billion bank bailout, Congress classified it as an “expanded credit line.” The Congressional Budget Office only scored it as $5 billion because IMF agreed to give the United States a promissory note for the rest of the bill.

    As the Wall Street Journal wrote at the time, “If it costs so little, why not make it $200 billion. Or a trillion? It’s free!”

    Link

    • syantiss

      +1

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