US Debt Ceiling

It is to be hoped that negotiations to settle the US debt ceiling  will be resolved before the so called October 17th deadline. There is no doubt the US Treasury will be able to carry on settling the country's debts beyond the deadline.

There is a danger that panic could set into the markets at anytime leading up to the deadline and afterwards. If the impasse continues who knows what would happen? All the domestic and international financial markets need to be confident that the US will settle its debts. The US President might order the Treasury to settle all essential debts even if it means breaching the debt ceiling.

What would happen ,however, if the Government  failed to pay social security checks or fail to pay its soldiers? Many thousands of other American citizens and small businesses are set to suffer if a deal is not reached.

A protracted impasse could lead to chaos in both the financial markets and the social arena.

The financial system might become ruined by inflation and ever increasing interest rates.

Some people of both the extreme right and the extreme left could be wishing for this as a type of catharsis which would lead to a new world order of the left or the right. I ask them to think again; the last think to wish for would be violence on the streets of America this would have far reaching consequences beyond the USA borders.

It is time for the politicians to stop playing with fire. Of course it is desirable for governments to run their societies without massive debt ceilings, but the debt ceiling needs to be managed downwards by careful negotiation about future spending and revenue collection and the growth of the economy. This has to be done slowly but not precipitously by denying the settlement of existing obligations . All nations have a lesson to learn here.