Why The Debt Ceiling Matters

Two weeks into the government shutdown. Just days away from the country maxing out its credit card by hitting the debt ceiling. Most of the country says what's the big deal, Congress? Just increase or credit limit AGAIN!

I'll tell you the problem and why I'm behind GOP efforts to address a reckless fiscal policy that has our country on the path to slow growth, rising unemployment, which will reduce income for all Americans.

Right now, the country is spending more than it makes. Our debt has exceeded our GDP for the first time since WWII. 

While disputed by free-spending left wingers, numerous studies point to a direct relationship 

between  high government debt levels and slower economic growth.

A slowdown in economic growth may not sound like a big deal, but over time 

it means that Americans in the coming decades will be a lot poorer than they 

would have been. 

According to this analysis, the average American worker will give up $12,000 

over the next two decades by just a 1% decline in GDP.

http://reason.com/archives/2013/10/11/the-morning-after-americas-debt-binge

The country needs to take some stiff medicine now, including major cuts to 

entitlement programs, raising the retirement age and making stiff cuts to other 

government spending. The pain should be shared with  all to protect future generations. 

Corporations do this all the time to weather cyclical downturns and avoid bankruptcy.

As for my investment decision making, I've been lightening up holdings and increasing 

cash accounts. Market 50%, Matress 50%. I still believe equity markets are FED driven, 

and the central bank shows few signs of turning off the free Money spigot. 

I say poor fiscal policy and poor monetary policy. Surging debt load and nonstop money 

being printed spells trouble ahead.  When China starts demanding more interest to buy our debt, 

the huge downward spiral begins.