By the Numbers: U.S. Debt Limit Graph

So, if every bank loaned money to someone or some corporate entity who or which kept increasing their borrowing so they could add more debt and use the new debt to pay existing debt, then that bank would go bankrupt.

In fact, every bank on the planet would have stopped lending long ago.

But the U.S. is different. The collateral that it borrowing against is it’s ability to tax it’s citizens, and it’s ability, via the Federal Reserve, to print money.

Printing money debases the currency by increasing supply and decreasing demand. It causes inflation.

Printing money causes those with money to move it into something else that holds value — see historic high prices of gold, silver, rising prices of food and, of course, black gold.

The elites running the currency printing press believe that printing money can go on forever, and that a lower dollar is a good thing since the U.S. can pay it’s $14 Trillion dollar debt off with money that has less value than the money it borrowed in the first place.

How long will it take those borrowing U.S. dollars to ask for value protection, to prevent value erosion?
You know, if the value of the dollars you pay me back with is less than the value of the dollars I lent you, then you have to pay me more dollars to make up the difference.

That is a function, sometimes, of the interest rate. But the Federal Reserve is holding the interest rate down, so the debasing of the currency works in the U.S. favor — for now. But borrowers will not watch their loans being paid back in ever decreasing valued dollars forever.

The Chinese have been steadily selling off their dollars, this debasing of the value of our currency combined with the total and complete inability of Washington to stop spending is likely the key reason.

And, the clearly over-the-cliff-we-go graph is here: http://www.theatlantic.com/business/archive/2011/04/the-us-debt-ceiling-a-historical-look/238061/

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