Please read this cogent explanation of the mess we are in. And by "mess" I mean "worldwide collective delusion".
The real reason the debt limit was raised?
Because without it the simulation would crash.
The economy is a mathematical simulation and not real as you were taught in school or in the universities. The economy is rooted in a currency bond that can never pay itself off because what is being used to pay is the same currency bond.
The monetary system overlays the economy as a transfinite mathematical loop.
It extracts or harvests everything you work for and accumulate during your lifetime. Money on the other hand points the flow of wealth towards you where you can actually pile it up.
Real money used to be silver, or gold.
A currency bond on the other hand, reverses the flow away from you and towards the issuer of the currency bond - the central bank.
Such a currency is rented to you in perpetuity, like a rental car that you can never return to the lot.
I talked about this to two fairly well known economists with actual websites and newsletters at a conference I attended.
This was basically my exchange as best as I can recollect it:
Me: If the currency is essentially a legal tender negotiable bond backed by Treasuries, which are themselves bonds, then shouldn't these bonds be listed as liabilities instead of assets on the balance sheet? And instead of income on the income statement, isn't it in fact deferred income (a liability) owed in common to the issuer and renter of the currency bond?
They: Nodding yes...
Me: Where's the so called "cash" or "income" if it's clearly a bond printed on paper with portraits of decease presidents on them?
They: Shrug and a nod...
Me: If both are true, then aren't all corporations and governments, like municipalities, technically in a legally contrived default as well as being insolvent? And doesn't the primary creditor -the Fed - ultimately have claim over all that's in default? As the creditor/lender of last resort?
They: Halfheartedly nodding yes. (But I now have their undivided attention).
Me: And if that's true, then how do you as economist derive a rational understanding of the market and indeed economics as a whole if the premise for it is itself irrational?
They: Stopped nodding and stared at me in surprise and alarm. (They've stopped moving and are frozen in place).
Me: If the premise is a hallucination, then isn't a conclusion about it also a hallucination? About a zombie economy propped up by that hallucination?
They: Smirked. Looked down or away.
Me: Isn't it a superstitious or fictional economy?
Me: Why is this allowed to exist?, I asked.
They: Everyone agrees to the hallucination Alex
Me: And there you have it? We're living in a mathematical simulation of an economy, and not in an actual economy?
"Exactly" they said. "But it works and that's all that matters."
(Spoken like true witch doctors and palm readers ladies and gentlmen. And they and those like them, are the ones in charge making "decisions" about the "economy".
And, if you're a politician reading this and you say a single word about debt or taxation without mentioning this hallucination for what it is.....I will. Diplomatically of course.)
“The economy is a mathematical simulation and not real as you were taught in school or in the universities.”
That’s your first mistake, which is to believe what you were taught in college/university had anything to do with economics. In reality it was Federal Reserve System brainwashing because the Fed funds economics departments. If the instructor doesn’t toe the line he’ll be gone.
As far as the rest, the following is a rather amusing take on banking (within Yahoo mb limits). The rest can be found in “The Creature from Jekyll Island":
Q. What are banks for?
A. To make money.
Q. For the customers?
A. For the banks.
Q. Why doesn't bank advertising
A. It would not be in good taste.
But it is mentioned by implication
in references to reserves of
$249,000,000 or thereabouts.
That is the money that they have
Q. Out of the customers?
A. I suppose so.
Q. They also mention Assets of
$500,000,000 or thereabouts.
Have they made that too?
A. Not exactly. That is the
money they use to make money.
Q. I see. And they keep it in a
A. Not at all. They lend it to
Q. Then they haven't got it?
Q. Then how is it Assets?
A. They maintain that it would
be if they got it back.
Q. But they must have some
money in a safe somewhere?
A. They wouldn't like you to
draw it out again.
Q. Why not? If I keep it there
you say it's a Liability. Wouldn't
they be glad if I reduced their
Liabilities by removing it?
A. No. Because if you remove it
they can't lend it to anyone else.
Q. But if I wanted to remove it
they'd have to let me?
Q. But suppose they've already
lent it to another customer?
A. Then they'll let you have
someone else's money.
Q. But suppose he wants his too
... and they've let me have it?
A. You're being purposely obtuse.
Q. I think I'm being acute. What
if everyone wanted their money
A. It's the theory of banking
practice that they never would.
the disconnect here is the difference between something with intrinsic versus extrinsic value...things with intrinsic value (like fertile farm land or a ham sandwich), things with mostly or entirely extrinsic value (gold, fiat currency, bitcoin). Things with only extrinsic value are not so much "hallucinations" as they are items that collectively symbolize wealth...their value being determined by how wide spread their importance as a symbol of wealth is, as well as supply/demand forces. If everyone puts faith in a particular currency, then it's effective as currency...it's really a matter of faith.