US could run out of cash as soon as Dec. 15, Janet Yellen warns

[Hydrogen]

The US government could run out of cash and be forced to default on its debt if lawmakers fail to raise the debt ceiling by Dec. 15, Treasury Secretary Janet Yellen warned Tuesday.

Yellen explained that the new deadline comes as a result of the $1 trillion infrastructure agenda, which was signed into law by President Joe Biden on Monday.

Many Republicans have said they won’t cooperate on any effort to raise the debt ceiling come December, saying that the US needs to reign in its out-of-control spending.

If the debt ceiling isn’t raised, the Treasury would likely be forced to prioritize certain payments like Social Security. The cutting of certain programs would likely fall disproportionately on the elderly and poor.

Raising the debt limit would not authorize any new spending, but rather let the government issue new debt to pay for existing obligations.

Yellen has insisted that a US default, in which the Treasury delays interest payments on debt, could devalue the US Dollar and launch the country as well as the world into a major recession.

Congress nonetheless has a number of other burdensome items, including passing Biden’s $1.8 trillion American Families Plan, that it must address before grappling with the debt ceiling.


https://nypost.com/2021/11/17/janet-yellen-warns-us-could-run-out-of-money-by-december-15/

....



More at source. I trimmed the article down to its most relevant parts.

It appears that a US federal government default is on the table. An event which has reached mythical proportions over the past century. Every year for the past 50+ years people warn the government could default and social security will collapse. This negative sentiment has become so common and widespread that over time americans have come to believe it can never happen. "Social security will fail." Oh but people have been saying it will fail for 50 years and it hasn't. This means social security can never fail.

As time passes and debt grows, our options and safety net for resolving these issues in a positive way, shrink.

If anyone has bright ideas for how these issues might be resolved. Now would be a good time to voice them.

A jump start on what could develop into a full blown crisis might also be a good policy.

[Darker45]

Oh, this looks like news recycling. Unfortunately, it isn't. But this is the exact same headline I read on the papers in July and then in August and in September and in October and now in November. Are we gonna be reading the same news next month? What's happening to the most powerful country in the world?

Is raising the debt ceiling the only way to resolve this issue once and for all? Or are the Republicans right in blocking it and instead pointing out the indiscriminate spending of the government?

[Lotus]

The US can't practically run out of cash as long as the world reserve currency is the USD. They can print money to pay their debts even to foreign countries. Of course that's a single use get-out-of-jail card. Because once they do that, the USD will cease to be the reserve currency.

Possibly at that point some "other" currency that is not controlled by any single government... perhaps something decentralized.

[enhu]

The US can't practically run out of cash as long as the world reserve currency is the USD. They can print money to pay their debts even to foreign countries. Of course that's a single use get-out-of-jail card. Because once they do that, the USD will cease to be the reserve currency.

Possibly at that point some "other" currency that is not controlled by any single government... perhaps something decentralized.

The government prints a lot already. Although it may be considered a solution, it's also going to make inflation rise as it is happening already in US.
There had been debates about raising the debt ceiling but no one will really want to be portrayed as a bad guy which is likely either Dem or Rep will not support it. But we'll see if this someone out there going to stand up and be the one.

[Poker Player]

Oh, this looks like news recycling. Unfortunately, it isn't. But this is the exact same headline I read on the papers in July and then in August and in September and in October and now in November. Are we gonna be reading the same news next month? What's happening to the most powerful country in the world?

And I'm familiar with this from many years ago as well, this happens periodically in the USA, kind of Groundhog Day but in politics. I don't have a crystal ball, but it is clear to me that they will not run out of cash, in the end they will reach an agreement in extremis and everything will be settled, as has happened several times in the past.

[PrivacyG]

The government prints a lot already. Although it may be considered a solution, it's also going to make inflation rise as it is happening already in US.

This should send everyone a very powerful message: there is no going back and the more they print, the deeper the scar will be.  Raising the debt ceiling is of no good.  It is going to only make things worse.  Once the recession triggers, we are going to wish there was no debt ceiling raise.

We are right at the start of a very deep crisis.  Look up the inflation rate of almost any country and you will see how bad this is becoming.  Not only in US, not only in Europe but worldwide.  There is no time to make any mistakes and I am really concerned about a choice as such.  As much as we do not want to see a crisis and to acknowledge there is going to be one, pushing it back again and again will only backfire on us stronger than ever.

-
Regards,
PrivacyG

[buwaytress]

So we also have record inflation on the cards not just in the US but in most of Europe, and large swathes of the global South.

Inflation, debt and defaulting of the world's biggest economy. That has got to be good for Bitcoin, no? Though I wonder if 100k usd next year is going to be as valuable as 100k usd now.

[Lotus]

Although it may be considered a solution, it's also going to make inflation rise as it is happening already in US.

Absolutely! That's the price they will pay and that's what makes it a one-time thing. Once it's used, it's gone forever. Nobody will trust the currency again!

[Lucius]

Oh, this looks like news recycling. Unfortunately, it isn't. But this is the exact same headline I read on the papers in July and then in August and in September and in October and now in November. Are we gonna be reading the same news next month? What's happening to the most powerful country in the world?

Some use this situation to keep markets under constant pressure and create a classic FUD that the world will collapse because the US will run out of money, and we all know that this will not happen anywhere else except maybe in a movie. Democrats and Republicans may play their political games from time to time, but when the water reaches their throats they will agree very quickly and everything will continue at the usual pace.

[goldkingcoiner]

I think this news is a bit unnecessarily alarmist. Whenever the US government starts facing a cash crises they always find a way to pawn off the debt in complicated ways. I think they will just print more money, therefore dropping the value of the USD via inflation and the ones who will have to foot the bill will be the citizens of the US. That way the dollar amount debt they owe stays the same but loses value at the same time.

And bread and milk at the supermarket rises in price, the unemployment rate up down because the companies can't handle the inflation without firing people and now you have more people on the streets.

[aysg76]

It appears that a US federal government default is on the table. An event which has reached mythical proportions over the past century. Every year for the past 50+ years people warn the government could default and social security will collapse. This negative sentiment has become so common and widespread that over time americans have come to believe it can never happen. "Social security will fail." Oh but people have been saying it will fail for 50 years and it hasn't. This means social security can never fail.

As time passes and debt grows, our options and safety net for resolving these issues in a positive way, shrink.

The governments have been putting the financial stability of the countries at stake from ages and when they see situations going out of hands they face the public with negative outlook and all these situations is potrayed as this has happened due to pandemic.But they have the simple solution to this which is printing more notes as they have been doing from the past.

A currency which has 4x intial supply and more could be printed without involving the community and all centralized control can pass shitcoin giggle test and that's US dollar for you.
                                          ~ Winklevoss

To all those who hold bitcoin don't care about social security at all as and all the freedom lies in their hands and government will not tell u and make you fool devaluing your inflationary fiat slowly and then next government will come up with same excuses and filling up their pokcets and you will have nothing left with you.

[stompix]

This time it will!!!! 

These are just like zerohedge predictions, I remember this line from gentlemand:

~ Zerohedge, the site that predicted 200 of the last 2 recessions.

Guess what, nothing will happen.
The US government won't run out of money, the US will not default and the next year we're going to have the same discussions again and this time it will be the last time...or maybe not!
The US debt is in $, the US can print $, unlike any other country they don't need another currency but others need theirs, so, nothing to see for a while, move along.

Though I wonder if 100k usd next year is going to be as valuable as 100k usd now.

Really depends on what you're buying.
Things here are just a mess, a complete mess, prices for energy have skyrocketed, prices for some things like electronics or spare parts the same, some foods again, but others...not really. Meat and vegetables stayed nearly flat, fruits barely moved, transportation costs flat (except if you drive yourself, of course), most services the same, or clothes and health products.
It has a lot to do with what you import, how much of it, and how bad the sector was hit by this.

[Lucius]

To all those who hold bitcoin don't care about social security at all as and all the freedom lies in their hands and government will not tell u and make you fool devaluing your inflationary fiat slowly and then next government will come up with same excuses and filling up their pokcets and you will have nothing left with you.

But how many such people are there in the US or globally? I will not go into the percentages that often come from various surveys based on a few hundred or maybe a thousand respondents selected from parts of society who have higher education and know how to secure themselves financially, but even that 10% of US citizens own Bitcoin, I'm sure few can say that they do not care about what will happen to their economy and currency.

Bitcoin is still relatively underrepresented as a storehouse of value for ordinary people, meaning they are dependent on the system and the mostly incompetent and corrupt governments that run it.

[Fortify]

The US government could run out of cash and be forced to default on its debt if lawmakers fail to raise the debt ceiling by Dec. 15, Treasury Secretary Janet Yellen warned Tuesday.

Yellen explained that the new deadline comes as a result of the $1 trillion infrastructure agenda, which was signed into law by President Joe Biden on Monday.

Many Republicans have said they won’t cooperate on any effort to raise the debt ceiling come December, saying that the US needs to reign in its out-of-control spending.

If the debt ceiling isn’t raised, the Treasury would likely be forced to prioritize certain payments like Social Security. The cutting of certain programs would likely fall disproportionately on the elderly and poor.

Raising the debt limit would not authorize any new spending, but rather let the government issue new debt to pay for existing obligations.

Yellen has insisted that a US default, in which the Treasury delays interest payments on debt, could devalue the US Dollar and launch the country as well as the world into a major recession.

Congress nonetheless has a number of other burdensome items, including passing Biden’s $1.8 trillion American Families Plan, that it must address before grappling with the debt ceiling.


https://nypost.com/2021/11/17/janet-yellen-warns-us-could-run-out-of-money-by-december-15/

More at source. I trimmed the article down to its most relevant parts.

It appears that a US federal government default is on the table. An event which has reached mythical proportions over the past century. Every year for the past 50+ years people warn the government could default and social security will collapse. This negative sentiment has become so common and widespread that over time americans have come to believe it can never happen. "Social security will fail." Oh but people have been saying it will fail for 50 years and it hasn't. This means social security can never fail.

As time passes and debt grows, our options and safety net for resolving these issues in a positive way, shrink.

If anyone has bright ideas for how these issues might be resolved. Now would be a good time to voice them.

A jump start on what could develop into a full blown crisis might also be a good policy.

While I love America, it seems that it has become so polarized around the extremes - it is at it's worst now with politicians trying to score points and maintain their own career salary instead of doing what is best for the country. The Republicans spent their last term trying to build a wall instead of focusing on the crumbling state of roads and bridges, now they're acting like babies because it creates good publicity for the democrats. I don't think the Democrats are angels at all, but at least they are not building their political base on hatred and division. It's a sad state of affairs when democracies only revolve around two political parties because it leaves so little room for compromise or change.

[amishmanish]

Understanding US Debt is one of my aspirations.

When you talk about your usual run-of-the-mill, third world country defaulting on its debt, the meaning is pretty much straight-forward. Countries have debt from International institutions or other countries on which they need to make regular interest payments. Failing to pay up amounts to default.

Now, who does the US owe fund to? To its own public, it seems.

This makes it pretty difficult to figure out what exactly does this mean. Some of the biggest creditors are the retirement and social security funds. This is because common people keep funding these by putting apart of their continous savings into it. These "Pension funds" are essentially cash cows. Thus, they buy up bonds from the government in return of the cash.

Now if the US govt defaults, guess who loses? These funds. Because then the debt held by them will lose its value and it'll be a situation of their funds having made a "bad investment" by investing in US Bonds.

Isn't that neat? The Govt gets to fund itself from people's savings. If it defaults, its the people's savings that gets hit.

On further reading, this gets funnier. Apparently the US can only default on its debt, if it breaks its debt ceiling. The Congress votes to increase this ceiling. If it can't do it with bipartisan agreement, that will mean a debt default. This is supposed to spook the markets and lead to a financial crisis. The only threat is the "sentiment". Nothing else. This essentially means that as long as USD is surmount, nothing bad can happen.

The situation this time around is a little bit different with China starting to gain ground. Even then, I don't think any of the major financial institutions, pension funds and banks that hold US debt are ever going to get spooked and move their investments elsewhere. So, these headlines are little more than click-bait; AND a trick to make you learn about this crazy system.

[yhiaali3]

The United States faced the same problem about ten years ago, but this time things seem more serious. At that time during the Obama administration, Standard & Poor's (the largest credit rating company in the world) lowered the credit rating of the United States from (AAA) rating to (AA+). And the American administration faced severe criticism because this reduces the confidence of investors in the United States of America, now the situation seems much more dangerous with the spread of the Corona virus and the many crises that the tired American economy suffers from, the main problem in my opinion is that the collapse of the American economy will lead to the collapse of the global economy as happened in a crisis Mortgage in 2008, which threatened the entire global economy at that time to collapse. The main reason is the centralization The link of the global system to the US dollar and the US economy clearly shows the necessity of moving to a decentralized global economic system that Satoshi laid his foundations with the invention of Bitcoin.

[el kaka22]

Considering the ceiling was raised during Obama and then Trump and now probably on Biden, it is just a regular part of life for USA government. They never really covered the nation properly and they never did a proper taxation so it is quite common for them to not have enough funds to compete with anything else.

I get that some people may want to see USA doing better but it is just not possible at this moment. They are spending money at a rate even socialist countries can't tax enough. I am one of the belief that rich people should be taxed a lot more, specially with their stock gains, but even that won't be enough to cover all these expenses. It means instead of trying to find funds, they need to cut expenses.

In a nation that spends 79 billion on education and 750+ billion on military, maybe it is time to cut that down. In a situation where 1 trillion dollars such a huge amount, if they cut 500 billion out of that military then it would be paid back in 2 years, all of pandemic would be covered in 6-8 years.

[magneto]

It is a bunch of theatrics for sure.

I doubt that this will actually transpire into anything meaningful.

They will eventually raise the debt ceiling because everyone understands what is at stake for the U.S. based fiat currency system if it doesn't happen. But it'll certainly happen slowly, and contingent on demands from both sides.

[Kakmakr]

So it really does not matter if the debt ceiling is increased or not... the outcome will be the same. The government cannot honor it's commitments and the tax payers become the safety net again.    The only negative impact will be market sentiments... but who will worry about that? (The US are one of the strongest economies in the world and they have bounced back from several "near" market crashes before)

Also if all fails... WAR is the solution. These wars give them unlimited funds to stimulate the economy and to create jobs for the unemployed. (Cannon fodder for the rich and powerful) 

[aysg76]

But how many such people are there in the US or globally? I will not go into the percentages that often come from various surveys based on a few hundred or maybe a thousand respondents selected from parts of society who have higher education and know how to secure themselves financially, but even that 10% of US citizens own Bitcoin, I'm sure few can say that they do not care about what will happen to their economy and currency.

Bitcoin is still relatively underrepresented as a storehouse of value for ordinary people, meaning they are dependent on the system and the mostly incompetent and corrupt governments that run it.

Still many people are reluctant to have only fiat or the so called safe heaven as they are living only in the delusional world where fiat is king but they are ignoring the rising inflation and cannot spot the corrupt government policies and yes they are still unaware about usage of bitcoin that could free them from the chains of centralized slavery but this is social trap and they are unknowingly becoming victims and puppet of the government and living an ordinary life which tells btc is not good and bad for environment but the so called paper money is good because it's government legal tender and accepted by all.The percentage will increase but it might be too late till they realize this fact.