Today the Dow Jones Average dropped 500 points after dropping 800 over the past 10 days. How is that possible? I thought Congress and the president had saved us by raising the debt ceiling.
I thought Wall Street liked certainty and Tuesday’s deal for raising the debt ceiling would soothe the financial jitters. But apparently, Wall Street also likes solvency, and the Federal government doesn’t have much chance of that. Therefore today we got panic on The Street.
To me that just means one thing: the whole debt ceiling scare was bogus from the start. The press, pundits and politicians alike told us that unless they raised the debt ceiling, the country “can’t pay its bills.” It would “default”.
I knew all along that that was not true. For that to be true, the government would have to have no source of funds but borrowed money. But the Federal government receives tax money EVERY DAY. I sent them about $2,500 this week myself. It was the payroll taxes from my itty bitty small business. I’ll send them another $2,500 give-or-take in two weeks. Multiply that by several hundred thousand businesses, many much bigger than mine, and the Feds are piling in the moolah.
So it simply wasn’t true that the United States would default on ALL its obligations. They just might have been forced to prioritize for once, like the rest of us. And that’s what makes politicians panic.
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