On January 15, 2013, Annalyn Kurtz writes on CNNMoney that Federal Reserve Chairman Ben Bernanke is not a fan of the U.S. debt ceiling, an arbitrary borrowing limit set by Congress.
The United States officially hit its $16.394 trillion legal debt limit on Dec. 31. As a result, until the debt ceiling is raised, Treasury is not allowed to borrow new money to help it pay all the country’s financial obligations.
Bernanke spoke about the misconceptions surrounding the debt ceiling. Contrary to Republican rhetoric, which has suggested that raising the debt ceiling is akin to opening up the spending floodgates, he said it merely allows the government to continue paying its current bills.
He compared not raising the debt ceiling to a family of debtors skipping out on their bills.
“This is sort of a family saying, ‘we’re spending too much, let’s stop paying our credit card bill.’ That’s not the way to get yourself in good financial condition,” he said.
In the case of the U.S. government, those bills include for example, payments to federal contractors, paychecks for the military, Social Security checks to seniors and interest on the debt to bond investors. This is spending that has already been approved by Congress.
“Raising the debt ceiling gives the government the ability to pay its existing bills,” Bernanke said. “It doesn’t create new deficits. It doesn’t create new spending.”
In the meantime, the Treasury Department has resorted to “extraordinary measures” to keep paying Uncle Sam’s bills. Treasury Secretary Tim Geithner has said he expects those measures to run out between mid February and early March, setting the stage for yet another fight on Capitol Hill.
Bernanke has long advocated that Congress focus on cutting the deficit over the long term, without choking off the already weak economy.
“I’m not saying that deficits and debts are a good thing, but the way to address it is to have a sensible plan for spending and a sensible plan for revenue,” he said.
Debt should be justified and incurred when the monies are pledge to stimulate FUTURE productive capital growth whereby the FUTRUE earnings will be first applied to the loan payback and then, once paid, fully paid out to the individual owners as personal income. In this way we can substantially grow the economy while simultaneously broadening private, individual ownership and creating “customers with money” to purchase the products and services the economy is capable of producing.
To achieve this FUTURE just economy, we need to reform the Federal Reserve Bank to create new owners of FUTURE productive capital investment in businesses simultaneously with the growth of the economy.
The solution to broadening private, individual ownership of America’s future capital wealth requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to build wealth and become “customers with money.” The proposed Capital Homestead Act would produce this result.
Sign the Petition at http://signon.org/sign/reform-the-federal-reserve.fb23?source=c.fb&r_by=3904687
