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Look I have a lot of respect for Ron Paul and his ability to cut through complicated issues.
But his statement yesterday that the -- on our debt is inevitable.
Let's just pulling -- Nothing is set ants Don we don't have to default and suffer the consequences.
And in fact the -- isn't even the biggest threat to our economy right now more on that in a second but first.
Paul does have something very very right he says our debt is unsustainable.
And he couldn't be more right.
Just the interest on our federal debt right now at nearly 630 million dollars today well it shows you what a big problem that -- this.
Even -- blowing through the -- -- 2 deadline does not have to be a killer.
That's because every single day Uncle Sam takes and tax dollars -- revenue all sorts of money comes in the front door.
According to the bipartisan policy center between August 3 and August 31 that income coming in the front door.
It will total -- 172.
And we can cover a lot of our bills with that let's check it out what we can cover 29 billion in interest charges on the national debt.
49 billion in Social Security benefits fifty billion in Medicare and Medicaid.
-- he's not going over the side of the of the hill she's gonna be say we'll continue to pay those bills two point nine billion for active duty military pay.
Money to Department of Defense contractors.
IRS refunds I know that's important to you.
And a quarter not all but some of the twelve point eight billion and unemployment benefits that would be DO.
Of course some bills.
They would not get paid there would be no cash for highway construction.
No checks for federal workers or retirees federal parks would close you get the picture.
So blowing through the -- 2 deadline absolutely not a good thing but not the end of western democracy as we know what.
Here's what could be disastrous and could happen even before August 3 one of the rating agencies S&P Moody's Fitch.
Decides to strip us of our triple A credit rating.
That would set in motion a series of events that could be more difficult to recover from than even the fall think about it here the things that could happen.
Interest rates would -- keep in mind that in Greece interest rates -- -- 17%.
Think about having that on your mortgage.
A sell lots of US debt folks sell treasuries.
Huge -- fall in the prices on treasuries of the government have to pay a lot more money to sell their debt that would be a disaster.
The cost of business obviously with spike because people would have to pay more interest for loans.
Now some say that riskier assets could get hit harder than treasuries for example professional investors -- to dump stocks Munis corporate bonds who knows.
Remember this is new territory.
It's unclear exactly what the professional investors would deem to be a safe place to park money during a financial catastrophe.
And here's another potential impact getting back to that triple A credit rating could be more difficult than people think.
It's -- Kennedy years to return to a triple A credit rating once it lost the crown.
And here's the irony of the companies that hold all this power in their hands -- the very ones who failed to warn us about the risks of collateralized mortgage debt.
They were blind to the mortgage meltdown which is -- very reason they may downgrade us to restore their credibility.
What a way to do it.
Only by attacking the root of this problem cutting government spending will we ever be able to restore our credibility with investors and credit markets around the world.
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