Please read @brothersean’s comments for cues on rational thinking. They should be helpful. @Acetracy comments are good, but the rates on capital gains could be actually lowered if loopholes were eliminated. @DanVR has some seriously good points and there is also the advantage of seigniorage in the benefit of using USD for the international trade currency.

It’s befuddles me that some of the commenters have better ideas than Mr. Whalen’s attempt to correlate the potential benefit of failing to raise the debt limit with congresses’ failure to retain the conforming loan expansion. The irony is that Whalen is advocating for homebuyers ability to avoid taxes on borrowing more. I agree with him on that latter point, but not the former. As a property owner in California, I have a strong desire to keep my expensive home expensive. But its a loophole that should be closed the next time home prices start heating up and we can afford to take the hit. That’s rational, isn’t it?

You hint at the truth with your line from Jefferson:

“No nation can call itself a democracy if it is not willing to reject the demands of convenience and use an occasional revolution, to paraphrase Thomas Jefferson, to cleanse the nation’s financial and political life…”

We are ALL ABOUT convenience and the status quo. We had our chance at “revolutionary change” in the midst of the financial crisis, and we actively shunned the opportunity. Now with the Fed contemplating writing put options on US Treasuries, the temptation to “ponzificate” for even longer will be Satanically efficacious.

http://en.wikipedia.org/wiki/Tax_Freedom _Day#Tax_Freedom_Day_around_the_world

1. The dollar is valuable BECAUSE of its credit and stability. If the US government shows such hubris and subject its investors to the “caprice” of its own Congress”, do you expect the credit of the dollar to hold up?

2. “Voting against raising the debt ceiling is voting against bailouts for Goldman Sachs, JPMorgan and other large Wall Street banks. ” I would like to take you up on that. On what basis do you state this?

3. What “political principles” do you hope to expound on by a swift default? Over-optimism? Argentina had a “swift default” and it was pretty damaging for the record.

Simply put, the US right now cannot afford such low rates on capital gains, dividends, and other 1099 income. These rates should go up by $$ bracket as in the pre-Reagan tax days. this low fixed 15% tax rate is bankrupting the country. However, those who are bank rolling senate election campaigns know that they can stop any bill that may raise rates with the help of the Republicans.

On the expenditure side, the US Defense department’s oversized budget, plus the needless 2 wars, etc. are a huge drain on resources and do not benefit the economy long term. The best defense for this country would be internal investment (infrastructure, research, training/education) but instead $billions are spent way out of proportion to what is needed. REmember, if you add up the top 10 countries defense expenditure it would about equal the US Defense budget. That’s huge and is not sustainable.

Additionally, the US needs to see its 1% Elite pony up their fair share. How? Pass a 2% net worth (intangibles) tax on persons, corporations, trusts, foundations with assets over $10 million. That tax alone could pay off US debt in less that ten years.