[freedogger]

Originally Posted by seattleflamer

Agreed. The debt ceiling is an artificial creation which no other G7 country invokes.

Originally Posted by seattleflamer

It reminds me of statuatory balanced budgets amendments at the state level.
It unnecessarily handcuffs government with artificially created laws in the guise of living within one's means using the metaphor that families are forced to live within their means.

Of course, these same families never ever take out equity loans to improve their houses or student loans to improve their employment prospects since they always pay cash....right?

Families never get into good debt nor should the govt....right?
Shortsighted people with no perspective using false analogies. It would be so funny if it weren't so sad.

A legislated debt ceiling is a bit ridiculous. With the USA's political system it seems like this is the only mechanism by which they will come to terms with debt and deficits.

The argument is not about debt being good or bad, its about too much debt. Families with too much debt will not be able to service it and they will go bankrupt. Same with countries and corporations (excluding bailouts which are a whole other thing...)

If it wasn't legislated, the market will dictate this ceiling. This is what is happening in the USA right now. Rating agencies are imposing their own debt ceiling by threatening a downgrade if deficits are not reduced. The threat of a downgrade is forcing the debt ceiling hike legislation to include deficit reduction measures.

A couple of posts on Zerohedge today illustrate these points. The first one on consequences of a downgrade:
http://www.zerohedge.com/news/nomura-us-downgrade-may-cause-repo-market-liquidity-freeze

The USA's debt to tax receipt ratio:
http://www.zerohedge.com/news/time-debt-ceiling-hike-really-different