Australia just did something really sensible.
The federal government will be able to borrow as much money as it wants after Federal Treasurer Joe Hockey cut a deal with the Greens to dispense with the debt ceiling completely.
Mr Hockey has just written to the Leader of the Federal Greens, Christine Milne, setting out the details of the agreement.
It means the government will not have to ask the Parliament for permission whenever it wants to borrow money above a certain limit.
This is so obviously a good idea, we hope politicians in Washington take it up first thing in 2014.
The debt ceiling doesn’t constrain borrowing. All it does is create the semi-frequent potential for systemic collapse. And it also creates an opportunity for politicians to be demagogues. Even if you’re in favour of reducing the debt and the deficit, you should hate the debt ceiling since it offers politicians a cheap talking point without having to do anything. So yeah, it’s just terrible. Congrats Australia! May we follow your lead soon!
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