This question has been argued by every generation for centuries. It is an ancient dilemma going back to times of Aristotle (384-322 BC). He took the easy way out concluding that both the Chicken and the Egg must have always existed. Aristotle like Plato, believed that everything on Earth first had its being in spirit. My personal belief is that the Chicken came first. I base this upon my belief in the scriptures. Genesis 1:22 says And God blessed them saying “Be fruitful and multiply, and fill the waters in the seas, and let the birds multiply on the earth”. Many believers in Christ along with non-believers conclude that the Chicken came first otherwise how could we have an egg?
How could the egg have hatched without a chicken laying on it? Most scientists have held the opposite belief. Recently scientists have come forth using DNA and computers saying that the egg came first. Oh, such a silly thing to give any attention too and spend time on. Yet the debt of our country and having a Debt Ceiling is no laughing matter. Which should we fix first our Debt the Chicken, or the Debt Ceiling the Egg? Recently this argument was forced to be in the face of Congress and our current President. The dilemma is never addressed, the Chicken just can’t seem to cross the road to get the other side. Since having a Debt Ceiling, we have never done away with our Debt! In most recent years, when we hit the Debt Limit, or known as The Debt Ceiling, uncertainty grows to insurmountable levels. The arguments run deep, within the halls of Congress. Those government arguments have now become the way of operations rather than accomplishments. This time there was no argument, no debate, but rather decisive action. President Trump reached across the aisle to the Democrats and struck a deal. On September 7th, a bill quickly passed the Senate and the House giving $15.3 Billion in aid for hurricane funding and a short-term measure to increase the debt limit. This would fund the government to avoid a shut down and a default. At the same time, a major milestone was surpassed, the National Debt reach over $20 Trillion. The Debt Ceiling would only be suspended until December 8th of this year. The chickens will then come home to roost again. Will Congress now come back to create significant measures to have debt reduction? If not, then why do we have a Debt Ceiling? How and why was it created?
The Beginnings of a Debt Ceiling
In the early years of our country, Congress authorized the borrowing of money on the credit of the United States per Article 1 Section 8 in our Constitution. To provide more “flexibility” to finance the United States’ involvement in World War I, Congress modified the method by which it authorized Debt in the Second Liberty Bond Act of 1917. Under this Act, Congress established an aggregate limit, or “Ceiling” on the total amount of new bonds that could be issued.
In theory, we didn’t have enough money to help fight in World War I. The solution was to create a thing called a Debt Ceiling. It worked like this: Our government would go into debt by creating bonds to fund the war. Investors would then buy these bond, knowing they would get their investment money plus interest back, but also fund a cause they believed in. That money then would go to the government. In turn, the government then turned around and provided loans to businesses. Businesses would use these funds build factories and create all the things needed to fight World War I. Things such as planes, tanks, guns, ammunition, and food. This would create economic growth, more jobs would be created, thus creating more taxable income. With the “added revenue” from job creation, and economic growth, the government would use that money to pay the bond the holders back their principal and interest on the bonds. It was a win, win, win situation in theory. This was really the beginning of a misguided financial belief. The belief that our country could create debt to stimulate to get out of debt. This belief has grown into a monster that has become unleashed. The problem is the government never used the added revenue to pay back down the debt. The creation of the War Bonds was for the sole purpose of funding a war. In doing so our country created an appetite for debt.
The Public Debt Act of 1941 set the modern stage for government debt finance called “Limits” which is now called the “Debt Ceiling”.
Now, when the Debt Ceiling is reached, the Treasury borrows money from different accounts called Extra Ordinary Measures. Essentially robbing Peter to pay Paul until there is no more money that Paul can give causing the government to shut down. Congress then comes together and raises the Debt Ceiling to a new level and we start all over. This action alone should show us our addiction to debt.
Yet in the beginnings of a Debt Ceiling there was no challenge. Our debt rose to unmanageable levels at one point but World War II helped our debt structure to get back to a manageable level. When looking at the last 20 years massive government spending has created the same problem. With less Gross Domestic Product (GDP), or simply put less money coming in to pay for our financial obligations, the Debt Ceiling has evolved to utter chaos. Could this be a reason of why we might need to be in a war, or even create a war to “help” again manage our unmanageable debt?
Can We Keep Raising the Debt Ceiling?
The Debt Ceiling has created two completely opposite beliefs.
- A belief that says, “Don’t raise The Debt Ceiling, quit overspending and come up with a plan to pay down the national debt. Do this at all costs to the point of shutting down the government. Let’s get serious about this for once and for all.”
- The other belief says, “Raise the Debt Ceiling at all cost to avoid a government shutdown. Then come back and create a budget that doesn’t increase spending and implement a plan that decreases our national debt to manageable levels. In addition to that create a plan to fund all of the unfunded liabilities our country has created, now amassing over $104 Trillion and growing.”
Raising the Debt Ceiling doesn’t increase spending rather it allows us to continue to make payments on our spending obligations. Unfortunately, Congress for the last decade, has moved into the blame game rather than the fix game. Our pathway to where we are didn’t happen from the Democrats or Republicans.
For the first 128 years the United States could function without a Debt Ceiling. This should sound the alarm to get us to wake up. We can’t afford to spend like this! Which comes first is not the question rather let’s just stop playing chicken and get to the other side of the road. We have until December 8th to create a master plan. I like eggs! Don’t smash the Egg by doing away with the Debt Ceiling. President Trump suggested this, so did the previous Secretary of Treasury Timothy Geithner in 2011 when our debt was $14 Trillion. The Debt Ceiling was put into place so our country wouldn’t be in this circumstance! Doing away with controls says we are too chicken to address the problem, which is what Congress is. Chicken! Because Congress is too chicken and our goose is cooked. The $20 Trillion in National Debt that is unmanageable, and the $104 Trillion in Unfunded Liabilities confirms we are cooked. Now it is just maneuvering and buying time until the crisis hits. Which will come first, hitting the Debt Ceiling again on December 8th this year, or a severe financial crisis? Whichever happens the U.S. Treasury doesn’t have the money for either.
How to Fix the National Debt?
Our country’s plan is to inflate. The Federal Reserve is now raising rates. The additional plan is to seize their citizen’s assets. The International Monetary Fund wrote it clearly in their report called Taxing Times on page 49 which says;” The sharp deterioration of the public finances in many countries has revived interest in a “capital levy”—a one-off tax on private wealth—as an exceptional measure to restore debt sustainability. The appeal is that such a tax, if it is implemented before avoidance is possible and there is a belief that it will never be repeated, does not distort behavior. The conditions for success are strong, but also need to be weighed against the risks of the alternatives, which include repudiating public debt or inflating it away”. This is the unspoken plan moving forward dealing with our debt. America is the largest debtor nation in the history of the world. No country who has gotten themselves into this position has ever gotten out of that debt problem without problem, a crisis, or a semi crisis. In 2008 leveraged money, or another form of debt, brought the world to its knees. Gold went up 72% the following year and more than doubled in 4 years. That financial hurricane was small and ignored. Compare that one to the current debt hurricane growing in force that the world has never seen before. This hurricane is being completely ignored again by most. Debt has ballooned in our country, countries around the world, and even Central Banks, since 2008. Yet this coming hurricane force will be unprecedented. According to billionaire and well-respected investor, Jim Rogers, he said “It will be the worst financial catastrophe in my life time, and I mean the worst”. As of the writing of this article this morning he was on Fox News Varney and Company, and confirmed his previous announcement saying this, “I suggest that everyone should own gold, now is the time to buy gold”.
Need I say more? Why not make the call now? Call Landmark Capital and learn why gold has gone up 402% while the Dow has gone up 101% since 2000. Find out the facts on why Gold has outperformed the Dow year to date. Discover the unannounced plan of how the government has passed laws to seize your 401K, IRA, and bank accounts to fix the country’s debt problem. Learn how simple it is to own gold. See how you can invested in gold in your IRA or 401k and take possession of your physical Gold without a tax liability. Get that peace of mind of protection and possibly grow your hard-earned money more in Gold than in stocks. Don’t let the arguments of Congress of which came first the Chicken or the Egg distract you. You can either be the cooked goose, or the goose with the Golden Egg.
