Debt if you do debt if you don’t: US debates raising debt ceiling.

Edward Harrison of says that raising the US debt ceiling is a no brainer and asks what is the point in the debate when it is seen as a formality. He sees it as an ideological discussion – it’s a farce or a sideshow preparing the population for the US elections.

On the debt issue, the concept that the Chinese are going to dump dollars is ridiculous. They have pegged their currency to the U.S. dollar. Revalue the currency and the accumulation of dollar reserves goes away. It’s as simple as that. The reason the Chinese are not revaluing more aggressively is because they know doing so would cause a massive disruption which would imperil their economy, already wracked by a massive capital investment bubble.

Moreover, a massive revaluation is the path to mutual economic annihilation as surely as the old Soviet-US mutually assured destruction on the nuclear front was. Call it murder-suicide. It won’t happen.

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