What is debt ceiling?
I don't understand what debt ceiling is in specific. I know what it means in definition, but what exactly is it? If 1 billion is the amount you can borrow, what exactly is that number coming from and what is that all about? Why don't you just borrow 100 quatrillion dollars then? And why do you have to pay the money back if you have 17 trillion dollar debt and US is still living a happy life? I'm so confused.... I'm like a 1st grader in economics...
What is the debt ceiling?
is it where our economy can't spend anymore because our spending is way to high. And we need to cut on how much we spend. Also the government can't pay back loans, ect.. If someone can provide a deep explanation on what is happening right now in the economy i would really appreciate it. Thanks
If the government raises the debt ceiling, then what is the point of having a ceiling in the first place?
The debt ceiling exists to perform as a fulcrum for negotiation between the two parties over financial power.It doesn't limit the ability of the government to borrow, because Congress has repeatedly raised it over time. Because both parties trade control of the government regularly, neither wants to give up the ability to use the debt ceiling as a political flash point for consolidating dominance.The party that currently rules the legislature can use the debt ceiling to extract concessions from the executive. The standard negotiating tactics that you see from both parties ("walking away from the table," "acting crazy," selectively leaking to the press) are straight out of a handbook like "The Secrets of Power Negotiating."That's why it still exists. Both parties are arguing over how to spend money that they're stealing from the productive.The debt ceiling doesn't limit the power of government, but you can make an argument that it limits the power of the executive and of the congressional majority. I disbelieve in the idea of checks and balances, but this is an example of how it works in practice.I find it strange that intellectuals in favor of democracy will praise it when it results in outcomes that match their interests but condemn it when it runs counter to them.If the government could issue unlimited bonds, it would enable even more fiscal tyranny than currently exists. The Federal Reserve already printed $600 billion to fund the Treasury during QE2; eliminating the debt ceiling would simply allow legislatures and executives to collaborate to generate even less sustainable debts in the long run.
How does the debt ceiling allows us to pay back the money we owe?
It doesn't. It in fact does the opposite: forcing us to default on debt that we could otherwise pay.Governments, even when they are running surpluses, pay off old debt by borrowing new debt. When they run surpluses, they can borrow less than they are paying off. When they are running deficits, they need to borrow more than they are paying off.When Congress says that the government must deficit spend, but doesn't allow the treasury to borrow to cover that spending, it requires that the treasury stiff someone who the government owes money to: it's vendors, it's contractors, it's employees, the folks who get farm subsidies, social security recipients, creditors, someone. In other words, squander 200+ years of the full faith and credit of the United States.The only thing that the debt ceiling does is give Congress to berate the administration for a “problem” solely in the control of Congress. Which is why before the Tea Party takeover of the Republicans it was only an “issue” when Congress and the Administration were different parties, and even then after the bluster it was always raised to meet expected borrowing.
What is the debt ceiling that politicians are talking about?
As individuals, we are a very poor credit risk. So, unsecured debt (such as credit cards) is expensive, well exceeding the inflation rate. Rates north of 20% (when inflation is running at 2.1%) is fairly common.But, as a country, we are an excellent credit risk. Why? Well, we have managed our currency well, we have HUGE assets (interstate highway system, research centers, bridges, oil and other mineral reserves, and whatnot) and, believe it or not, we can obligate future generations to pay our debt (we are not raping our children and grandchildren - they also get the accumulated assets). Plus, we have NEVER defaulted on our debt.So, while it looks like we are being idiots drowning in debt and raising the debt ceiling means that we would be wallowing in even more debt - we do manage to do good things with our debt. We paid for all of the interstate highway system with debt. We fought WW2 with debt. We built Shasta dam, Hoover dam, Grand Coulee dam and the entire TVA with debt.I am not saying that all debt is good. If we borrowed money and spent it on, say, baubles from China, that would not be so smart. But if we spent it on tools that improve our work and our lives, the investment could be well worth it. And you have to realize - as a country, our time horizon for benefit is forever.In this debt ceiling debate, we keep talking about debt but never about the other side of the balance sheet - assets. If the US government borrows money to pay for vaccinating every citizen against whooping cough, is that such a stupid thing?
How will the US get out of debt?
What are ideas the government and Obama are thinking of? What things are they gonna do to make more money, and spend less? Or what are ideas YOU personally think would work??
Revised Beta II, Medium Level Ceiling?
Suppose that a subtest of an IQ test has a maximum score of 20. If you score 20 on this subtest, you have reached the 'ceiling'. Low ceiling means that most items on the subtest are easy and there are only a few more difficult items. It is low because it is relatively easy to get the maximum score, even if your IQ is not in the gifted range. High ceiling, in contrast, is when apart from the easy questions there are also many progressively more difficult items. So if you took a test with a low ceiling and got 20/20 your IQ could have been classified as being in a gifted range (e.g. 130+), but if you took a test with a high ceiling you might not be able to answer the most difficult questions (e.g. those that only top 1% of population should be able to answer correctly) and hence you would get a score of 20/30, bringing your IQ to an "average" level (e.g. 105). A medium level ceiling is something in-between these two extremes, there are more difficult items than in a low ceiling test but less so than in a high ceiling test. Each IQ test, regardless of its ceiling level, will provide a score that can be translated into a specific IQ or a percentile (so each test in principle measures the whole range of IQs). However, those with higher ceilings are much more reliable and are hence preferred in clinical settings. But because high ceiling tests usually require individual assessment and take many hours to complete, the ones used in mass testing tend to have moderate ceilings.