- Timothy Geithner, U.S. Treasury Secretary, admitted in
a letter to congress dated January 6th, that the United States Treasury
would be forced to default on its credit obligations without clearance
from Congress to raise the amount of money that the treasury is allowed
to borrow.
-
- After citing a list of "extraordinary measures"
Congress has had to resort to in the past to avoid entering a state of
default, Geithner stated, "Once these steps have been taken, no remaining
legal and prudent measures would be available to create additional headroom
under the debt limit, and the United States would begin to default on its
obligations. The extraordinary measures include, "suspending sales
of State and Local Government Series (SLGS) Treasury securities; suspending
reinvestment of the Government Securities Investment Fund (G-Fund); suspending
reinvestment of the Exchange Stabilization Fund (ESF); and determining
that a "debt issuance suspension period" exists, permitting redemption
of existing, and suspension of new, investments of the Civil Service Retirement
and Disability Fund (CSRDF).
-
- That the United States has already defaulted on its obligations
is beyond dispute, at this point, as its the rate at which its debt service
obligations is growing exceeds the rate at which the United States GDP
could possibly grow, meaning that without drastic cuts to government spending,
the debt can only continue to grow.
-
- Before our very eyes, the so-called leadership of the
world's largest economy is intentionally bankrupting the country and devaluing
its currency in what can only be a precursor to rampant inflation. Since
the integrity necessary to manage this problem does not exist within the
United States political system, the rest of the world has no choice but
to stand by and watch the value of their United States Treasury Bills diminish
incrementally on a daily basis. Selling them will only exacerbate the problem,
but the question must be asked, how long until the remedy is preferred
over the miserable condition?
-
- Geithner goes on to say, in a remarkable baring of the
national soul,
-
- However, if Congress were to fail to act, the specific
consequences would be as follows:
-
- The Treasury would be forced to default on legal obligations
of the United States, causing catastrophic damage to the economy, potentially
much more harmful than the effects of the financial crisis of 2008 and
2009.
-
- A default would impose a substantial tax on all Americans.
Because Treasuries represent the benchmark borrowing rate for all other
sectors, default would raise all borrowing costs. Interest rates for state
and local government, corporate and consumer borrowing, including home
mortgage interest, would all rise sharply. Equity prices and home values
would decline, reducing retirement savings and hurting the economic security
of all Americans, leading to reductions in spending and investment, which
would cause job losses and business failures on a significant scale.
- Default would have prolonged and far-reaching negative
consequences on the safe-haven status of Treasuries and the dollar's dominant
role in the international financial system, causing further increases in
interest rates and reducing the willingness of investors here and around
the world to invest in the United States.
- Payments on a broad range of benefits and other U.S.
obligations would be discontinued, limited, or adversely affected, including:
- U.S. military salaries and retirement benefits;
- Social Security and Medicare benefits;
- veterans' benefits;
- federal civil service salaries and retirement benefits
- individual and corporate tax refunds;
- unemployment benefits to states;
- defense vendor payments;
- interest and principal payments on Treasury bonds and
other securities;
- student loan payments;
- Medicaid payments to states; and
- payments necessary to keep government facilities open.
-
- I personally am stunned. No mention is made of sales
of assets held by the United States government. Rather than liquidate its
own real estate to cover its debt, the defective and fiducially delinquent
U.S. government plans to first eradicate the incomes of its poorest citizens.
-
- If this document is not a harbinger of impending civil
unrest on a national scale in the United States, I can't imagine what is.
Big big changes are on the horizon though. Of that there is no doubt.
-
- MidasLetter Premium Edition identifies 5 stocks on the
first Sunday of each month from the TSX Venture Exchange that are expected
to double within 12 to 18 months, 9 out of 10 times, or your money back.
Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php.
30 day instant refund period from your first subscription day if not 100%
satisfied.
-
- Related posts:
-
- 1. U.S. to Default Unless Congress Raises Limits
- 2. Argentina Default Narrowly Avoided
- 3. No More Benefits for 2 Million Jobless Americans
- 4. U.S. Treasury Lying to Public about A.I.G. Losses
- 5. Irish Default Predicted
|
