Washington just suspended the debt limit until after the Presidential Elections.
What could possibly go wrong?
Washington has borrowed more money than all of the wealth our economy produces in a year.
Washington has promised ten times more than that in unfunded entitlement programs and other government spending.
What if our creditors step on the brakes and decide not to lend us money without a massive interest rate increase?
What if the banks start dumping the piles of electronically created money used to buy government bonds into the economy causing runaway inflation and massive interest rate increases like in the 1970s?
What if the reserve currency status of the U.S. dollar starts to sunset and foreign demand for the dollar can only be stimulated with higher interest rates?
What if a genuine emergency requiring massive new borrowing strikes and there is no way to borrow the necessary funds without getting gouged on interest rates?
Does Washington not get the picture?
All interest rates need to do is return to historical rates and then the joy ride ends.
Massive cuts or massive tax increases would be the only way to square the huge bite interest payments would take out the budget. And that would likely cause an economic collapse that would only make the problem worse until the system bottomed-out.
Isn't it a lot more intelligent to slow down the federal government's borrowing? Shouldn't folks in Washington be thinking about setting a glidepath to a balanced budget so that our country's wellbeing is not held hostage to insane fiscal policy?
Maybe so. But the events of the past week prove we're stuck riding with stupid so long as we yield to politics-as-usual.
There's only one way to stop the car before the crash. States must take the wheel.