Default 2

The word default got a lot of interesting usage in the discussion.  If we do not raise the debt limit then we will be in default - we would not be able to meet all of our obligations.  That would be bad.  But there is bad, worse, and worst.   In this case, the worst would be not paying the interest on the national debt.  That would roil the international markets and put the “full faith and credit” of the USA in question.  With a quick flip of the tongue Democratic speakers (including Obama) would switch and act as if not paying the interest on the debt would be the FIRST default on the list and that it would ruin the “full faith and credit”.  This fear mongering caused the short term treasuries interest rate to go up to – are you ready – almost one half of 1 percent.  There followed a “panic” and a flight to safety!!!  Where did they go to feel safe about the location of their money?  They bought US Treasuries.  Perhaps the more astute of them, or their advisers, had read the 14^th amendment to the US Constitution which says in part: “The validity of the public debt of the United States, authorized by law, …, shall not be questioned.”  That overrides any regular law about debt limits or otherwise.  It would also put debt payment at the head of the line.