US Debt Ceiling Breached, President Obama to Seek Increase

From the International Business Times,

President Barack Obama will ask Congress to raise the federal debt limit in "a matter of days," White House Press Secretary Jay Carney said on Tuesday.

Although the president was scheduled to ask for $1.2 trillion in additional borrowing authority on Dec. 30, the action was delayed because Congress has only been holding pro forma sessions, meaning no formal business has been conducted. Still, Carney told reporters the White House will request the third and final increase, as determined by the debt-ceiling deal reached by Congress last August.

"I'm confident it will be executed in a matter of days, not weeks," Carney said.

The vote could come as early as Tuesday Jan. 17, after lawmakers officially begin the second session of the 112th Congress.

The U.S. reached the current $15.2 trillion debt limit on Wednesday Jan. 4, The Hill reported. Since then, the federal government has reportedly tapped into its Exchange Stabilization Fund in order to avoid exceeding the limit. The U.S. Treasury Department Web site states the fund consists of three types of assets: U.S. dollars, foreign currencies and Special Drawing Rights.

More signs of the Obama administration’s insatiable appetite for spending… (the following charts from Heritage budget chart book)

…a trend where mounting deficits continue to drive US debt levels vertically

…which if sustained would eventually reach crisis levels.

Yet if other countries desist from funding skyrocketing debt, and with lack of internal savings, this means either default or the Fed’s monetization of debt, that risks an inflation spiral.

It appears that President Obama is on track to take the US to a tipping point or what I call the Mises moment.