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That damn debt ceiling!

The debt ceiling was put in place by Congress during World War I and its purpose was to shift debt management from Congress to the government. Before, it was Congress who approved all expenditures. But during the War, it became difficult for the government to go to Congress and get approval for increasing war effort costs. So, Congress shifted this manner to the government, but it established a limit after which the government must have sought Congressional approval. If approved, Congress raised the ceiling and within the new limit, the government could do its day-to-day operations. But that’s when the circus started.

Since then, Congressional parties used the debt ceiling for their petty agendas, holding the US economy hostage. When Republicans were in power, none of them had any issues raising the debt ceiling and Democrats opposed it. When Democrats were in power, the tables turned around. They had no issues raising the debt ceiling and Republicans opposed it. When you look at it from this perspective, you will see how petty and stupid these politicians are.

And since then, this debt ceiling limit, which was also designed to curtail the spending, failed to do so. The national debt rose nearly 400% in the last 20 years.

debt ceiling

But if you see politicians fighting over the spending, remember, next time when voting, that these politicians are fighting over expenditures such as Social Security, Medicare or Medicaid, Veterans’ programs, higher education, department of health expenditures, education, justice, and veteran affairs (among others). These are the biggest mandatory and discretionary expenditures.

debt ceiling

Remember these politicians and in this case Republicans that they are the ones who will be responsible for your social security pay cut, or your Medicare failure. When at the voting booths, vote them out. They do not care about you. They have their retirements and Medicare secured but the government and they and their families will be taken care of no matter what. It is you who will be the useful fool cutting out your own welfare when you reach retirement.
Of course, you may be outraged over the raising expenditure and debt. You may be angry over Biden’s reckless spending, but you should not be supporting anything that cuts your benefits for which you worked hard your entire life and paid (involuntarily) into the system.

debt ceiling

Despite all this circus, the markets held well. There were rattles about the debt ceiling, but it seems that the market expects politicians to strike a deal in the end. At least for now. That’s why we are mostly flat with some wobbles around. And tech stocks even exploded upwards last week (mostly on better-than-expected earnings). The FANG index (FGNU) skyrocketed a whopping 16% last week!

It seems that investors are finally waking up and realizing that all the stocks like META, TSLA, NVDA, AMD, NFLX, AAPL, AMZN, SNOW, MSFT, or GOOGL are still the best growth stocks in the market and selling them out is foolish. The investors were selling out of these stocks, and today, they are hastily buying back at higher prices. You may argue that these stocks are overpriced, and they are, but they will perform well better in today’s FED environment than last year’s FED policy. These stocks will outperform the market this year.

The latest market worries are about the debt ceiling and regional banks turmoil. It is my opinion that both will be resolved. The banks had a way better week last week and the debt ceiling is still on the table. Both parties will have to give up some of their agenda and get the things done.

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