In the la la land of Washington, DC, the secret password has been “debt ceiling” for weeks now. The August 2nd deadline is fast approaching and talks of raising the roof (or ceiling if you prefer), are still raging on with no deal in sight. Because the two sides cannot come to an agreement, we’ve seen the art of the narrative played to perfection by the Obama administration. They’ve made it so that every time someone says the secret password (debt ceiling), they must also say “default” within one or two sentences. By ingraining this one-two punch into the minds of the public, the White House has successfully utilized the fear card. “You don’t want to let us borrow MORE money? How does the United States government defaulting sound to you?” Or, “You want to CUT spending at a time like this? You must want full economic armageddon!” …And so on according to the mainstream narrative.

This economically ignorant line has been parroted from every corner of every media outlet in existence. I dare you to browse the web or flip on your TV or radio and not hear someone say “debt ceiling” and “default” within 3 minutes. But at least we have our own paper of record, the Denver Post, to relieve us of this ignorance… right?

If the debt ceiling isn’t addressed by Aug. 2, there is a great chance that the United States of America, the richest country in the world, would default on its obligations.

NO! NO! STOP! Tell me that’s a typo. That’s gotta be a misprint right guys?

Of course it isn’t. It’s not a misprint, it’s Wednesday’s editorial. Where does a guy have to go to get some sanity around here? Isn’t it obvious that if the debt ceiling is not raised we’d prioritize paying our bills? Okay, so we can’t borrow any more money. Fine. How about we prioritize our debt payments at the top of list – as the first things we pay with the money we have. Then after that, we move on to the most essential functions of government. By the time we run out of money, we’ll have not funded some bottom of the barrel government bloat – like the latest green energy scam or some other wasteful corporate welfare. This is exactly the action that any normal person would take if faced with the same situation. We’d prioritize our obligations by importance and necessity, and when we finally got down to luxuries such as those sports tickets we wanted or that sweet cordless drill, guess what? We couldn’t buy it.

We wouldn’t just throw our hands up in the air say, “I guess I can’t eat now!”

For some much needed sanity on the issue, I found this article on the Mises Institute website titled, A Short History of US Credit Defaults. After going through some earlier defaults in our country’s history, it concludes with this passage about our current situation:

In this event, it is unlikely a default will occur. Historically, governments prioritize debt service above all other expenses. If the expansion of funds via debt becomes impossible, the Treasury will cease paying other expenses first, starting with “nonessential” discretionary expenditures, and then move on to mandatory expenditures and entitlements as a last resort. In extremis, what will happen is that all the losses will be foisted onto the Federal Reserve. The Fed holds something on the order of $1.6 trillion in debt issued by the Treasury of the United States. By having the Federal Reserve purchase blocks of Treasury debt and defaulting on these non-investor-held securities, the United States can postpone a default against real investors essentially forever.

Thank you to the Mises Institute and to anyone else who is not perpetuating this myth. Even better than not perpetuating this silly ignorance, would be to advance a better, more truthful narrative. How about this one?  How about we all jump on the “lower the debt ceiling” bandwagon! Take that!