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10/4/2013 6:59:39 PM
17
Is the government shutdown really a bad thing? I mean, if it comes to the debt ceiling--which I hope we don't raise, is that really the end of Western civilization?
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Despite several financial experts stating "If the United States defaults and cannot pay their debts (Raising the Debt Ceiling), it could damage the global economy which is still weak after 2008?" [url=http://www.reuters.com/article/2013/10/03/imf-lagarde-idUSW1N0HG00K20131003]Source[/url]
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由Quantum编辑： 10/5/2013 9:50:15 AM[quote]Our government has no incentive to optimize and cut wasteful spending unless we give it a reason to.[/quote] You haven't taken into account the fact that the only reason government debt is worth looking at is interest payments. e.g., a debt of 100 billion dollars at 1% interest would mean the government has to pay an additional 1 billion dollars, which could hamper economic growth. If you fall off the cliff, not only do you fail to get rid of the debt (it's still there!), you also crash the world economy, the US economy, and make the debt even harder to remove. Ultimately, at 2.5% growth per annum, the US can run a deficit of 400 billion per year and not increase the GDP to debt ratio that many policy makers seem to have an unhealthy obsession over. You also kill the US's credit rating. The US has never ever defaulted on a payment, it would set a large historical precedent if the US defaults. That, and the debt limit is actually better described as a limit to how much we can pay back, not borrow. E.g., a construction company builds a road for 200 million dollars. It then asks for payment. Since most financial institutions (everything from businesses to governments) generally don't have the money immediately on hand, they borrow it from others to pay off the bill. If you hit the debt ceiling, the US government is unable to pay the construction company. That's really, really bad.
