US Debt ceiling debate getting close

Posted | 20/09/2013 / Views | 1740
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So yesterday all celebrated the continuation of easy money out of the US.  But we all know there is no such thing as a free lunch and the cost of buying all these bonds is the debt it creates and that comes to a head yet again in early October.  It is at this time that the US hits its approved debt ceiling of $16.7 trillion.  What will ensue like last time is a show of posturing between the left and right about not approving it unless cost cutting is put in place etc, all the while acting like they have a choice.  Put simply, if they don’t raise it the US defaults and can’t pay its bills like wages, social security, etc etc.  Last time they took it so far that their credit rating got downgraded.  This time both sides are making it clear we are in for another protracted affair.  The White House has even issued a memo to Federal Agencies to prepare for a Government shutdown.  The effect of cost cutting of course will be further downward pressure on the US economy and hence less likelihood of any tapering of QE.  Not great news for the US but keeps building the case for gold and silver…