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AP Lies Its Collective Head Off About Debt Limit

From a shameless Associated Press:

Q&A: What Happens If US Breaks Borrowing Limit?

By CHRISTOPHER S. RUGABER | October 13, 2013

WASHINGTON (AP) – Negotiations in Congress to raise the nation’s borrowing limit are up against a deadline of Thursday. If the limit isn’t raised by then, the government will no longer have authority to borrow to pay its bills.

BS. The government will still be obligated pay its bills. It will just be prohibited from borrowing any more money.

So what happens if Thursday comes and goes and the limit isn’t raised? The scary thing is, no one really knows. Going past the deadline would be unprecedented.

This is another blatant lie. This would not be unprecedented. The country has ‘defaulted’ numerous times and the world did not come to an end. (See below.)

The possible consequences are complex. But none are good. The gravest threat is that the government would soon fail to make interest payments on its debt. Any missed payment would trigger a default.

More BS. The President is required by law to pay the interest on the debt, which should be easy to do, since the Treasury will still take in ten times the amount owed on the debt every month.

Financial markets would sink. Social Security checks would be delayed.

Another lie. Social Security is the only other obligation besides the interest on the debt that the President is required by law to pay.

Eventually, the economy would almost surely slip into another financial crisis and recession…

Yet another lie, since the US has defaulted four to six times before without any financial crises or recessions.

From the very same Associated Press:

US never defaulted on its debt? Not so fast

Oct 14, 2013

WASHINGTON (AP) — You hear the same proud claim every time Washington wrestles with the debt limit: The United States has never defaulted. But the record’s not that clean. America has stiffed creditors on at least two occasions.

Once, the young nation had a dramatic excuse: The Treasury was empty, the White House and Capitol were charred ruins, even the troops fighting the War of 1812 weren’t getting paid.

A second time, in 1979, was a back-office glitch that ended up costing taxpayers billions of dollars. The Treasury Department blamed it on a crush of paperwork partly caused by lawmakers who — this will sound familiar — bickered too long before raising the nation’s debt limit.

These lapses, little noted outside financial circles in their day, are nearly forgotten now…

They were certainly forgotten by the AP, who were probably only shamed into this article by others having noted their previous mendacity on the subject. Or maybe they decided they had better stop scare-mongering over a possible default, since it’s now the Democrats who are trying force one.

But, as usual, the AP still didn’t even tell the whole story.

From the New York Times:

The U.S. Has Defaulted Before

By CATHERINE RAMPELL | October 4, 2013

As Carmen Reinhart documented in her impressive chartbook of the last several hundred years of international financial crises, the United States has actually defaulted on its debt obligations before.

The first time was in 1790, the only episode Professor Reinhart unearthed in which the United States defaulted on its external debt obligations. It also defaulted on its domestic debt obligations then, too.

Then in 1933, in the midst of the Great Depression, the United States had another domestic debt default related to the repayment of gold-based obligations…

And as John Chamberlain pointed out over at the Mises Institute back in July 2011, the US also defaulted during the Continental Currency crisis in the Greenbacks crisis in 1862, as well as during the Liberty Bonds crisis in 1934.

So it can be argued that there were defaults in 1790, 1812, 1862, 1933, 1934, 1979. And none of them caused the kind of apocalypse that the news media have been scaring us about.

This article was posted by Steve on Monday, October 14th, 2013. Comments are currently closed.

One Response to “AP Lies Its Collective Head Off About Debt Limit”

  1. Astravogel says:

    …and dogs and cats living together. Since Economics
    is no longer taught in school (not ‘relevant’) they can
    get away with this garbage. Country Boys will Survive.

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