Ed Huntress wrote:

Karl

Well, we know what their first priority is, right?

Congress does whatever it takes to get elected.
the current dog and pony show is what it takes
Eventually after entertaining the masses
They will raise the debt ceiling and life will go on


The trade deficit is the real source of the excess debt
somebody has to go into debt if you are going to be
trading IOU's for foreign made goods

The private sector is no longer willing to carry this
trade deficit debt
They did it for the past 20 years and now they are done
Anybody with a brain would know this day was coming
you can't expect the private sector to increase their debt
by 300% every 20 years indefinitely

So Congress knows that either the federal govt
carries this debt or they allow the economy to
collapse into a deflationary spiral
where losing your house and job becomes
much more widespread than it already is

If they go that route the public will
throw the bums out of Washington
so it is a pretty safe bet they bums aren't going to do that

The growing federal debt will mean that foreign goods
will become more expensive relative to US made goods
Which means consumers will purchase more US goods and
the US manufacturing will start to grow instead of shrink

Eventually, this growth in manufacturing will
reduce or eliminate the trade deficit
And then since the US will no longer have IOU's
as the main thing the US exports
there will be no need to go into debt