Speaker of the House John Boehner (R-OH) and President Barack Obama wait before a meeting in the Cabinet Room of the White House July 10, 2011 in Washington, D.C. to negotiate increasing the debt ceiling in order to avoid defaulting on its debt. (Photo by Brendan Smialowski/Getty Images.)
Paul Solman answers questions from NewsHour viewers and web users on business and economic news most days on his Making Sen$e page. Here’s Monday’s query:
Name: Tom Camillus
Question: In the event the Congress fails to raise the debt limit, would it be wise to have paper cash (thousands of $20s, $50s and $100s) in case the banks freeze up or are closed?
Paul Solman: “Thousands of $20s, $50s and $100s” … you mean a million dollars or more in paper currency? For what, exactly? You thinking of buying an island, Tom? Renting the Metropolitan Opera for a bank freeze party? (Gotterdammerung, maybe?)
‘Money 2’ Photo by Flickr user borman818.
“Wise” is not the word I’d use to describe such a strategy. I’d prefer “kooky.”
- Where do you stash so much cash?
- Why would the banks freeze up?
- If California’s flirtation with default is any guide, the first victims will be vendors who sell things to the government, followed by government employees. The federal government will take in more than $2 trillion in revenues this year. Cost of paying interest on the federal debt? Take a guess. Less than $300 billion. In other words, we have more than $1.7 trillion of elbow room before default, bank freezes, etc. Moreover, how long do you think a freeze on government vendors and then employees will last before the ceiling is raised?
Read more about the latest developments in the debt ceiling here.