U.S. National Debt Ceiling

[hugeblack]

I did not find any topic talking about this matter, and since it is a problem that will come to the fore during the next month, I decided to create this topic.

The federal debt limit of the United States was set more than a century ago, and some may believe that setting a debt ceiling means that obtaining debt will be more difficult, but the process aims to facilitate government access to debt, provided that it does not exceed a certain ceiling, and then there must be legislation that allows them to exceed that roof.

Disagreements over the debt ceiling caused two shutdowns of the federal government and a loss of trillions of dollars, which is likely to happen and could cause a bigger crisis, especially with winter and the bad economic situation that we all know.

The debt limit has been set at $31,381,462,788,891.71, or just under $31.4 trillion, and the government is close to reaching this limit even before expectations that it would happen during the year 2024, but we will reach that limit during the year 2023.

What do you think and the possible effects if the United States defaults on its debts or its credit rating is downgraded?

For more and sources https://www.washingtonpost.com/business/whats-the-debt-ceiling-and-will-the-us-raise-it-again/2022/12/02/f6bd2d76-7282-11ed-867c-8ec695e4afcd_story.html

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[Gyfts]

The U.S. military-industrial complex gives the debt a bit of leeway, but if they default then their creditors simply won't be inclined for future trade and the U.S. economy recedes. Not all debt is bad though. If the population is sustainable and is able to generate more workers and as long as the economy keeps up its pace, then some level of debt is sustainable. Most of the debt is internal anyways, owed by the American public. Eventually they'll catch on and recognize their government is generating more debt than they can pay off in many life times. It isn't possible to keep borrowing from people that haven't been born yet.

[stompix]

What do you think and the possible effects if the United States defaults on its debts or its credit rating is downgraded?

Simple, we're f*****!
Rember when the US economy coughed a decade ago? The entire world came down with a fever if now it would default on all the debt it would send us into a coma, everything that's happening now will be remembered as the not-so-bad times before the collapse.

Leaving the consequences aside, the level of debt doesn't matter as long as its serviceable, people have been talking about the default for decades, and every single raise has come with predictions of an imminent collapse and obviously, there was none, Japan's debt has surpassed GDP back in 98 and since then we have heard all these stories about how it will end, crash, burn and here we are 25 years from that, another 14 years since it has gone over 200% and nothing.
To put in perspective, from the start of that news, 1 billion people have died in this world of old age and haven't seen the "inevitable" happening, how many it will be till the US defaults? 10?

[asawale]

First, I don't think anybody will see the US as being a debt defaulter even if she doesn't pay her debts on schedules. The major advantage the us has over other countries as regards foreign debts is the debts are in the US currency ($). And all these foreign economists believe the US can just decide to print more bank notes and clear her debts most especially the internal debts, except there is a legislation that prohibits her to do so.

[so98nn]

What do you think and the possible effects if the United States defaults on its debts or its credit rating is downgraded?

Simple, we're f*****!
Rember when the US economy coughed a decade ago? The entire world came down with a fever if now it would default on all the debt it would send us into a coma, everything that's happening now will be remembered as the not-so-bad times before the collapse.

Leaving the consequences aside, the level of debt doesn't matter as long as its serviceable, people have been talking about the default for decades, and every single raise has come with predictions of an imminent collapse and obviously, there was none, Japan's debt has surpassed GDP back in 98 and since then we have heard all these stories about how it will end, crash, burn and here we are 25 years from that, another 14 years since it has gone over 200% and nothing.
To put in perspective, from the start of that news, 1 billion people have died in this world of old age and haven't seen the "inevitable" happening, how many it will be till the US defaults? 10?

Because they also increase the cost of everything each year by some % factor and thus levy taxes on it to keep the nation going. Idk, but that’s a dirty business and we can’t really compare US and Japan. The US has always been ranked first for the GDP in comparison with any other nation while over the time public debts will also matter.

US has long gone this time. The difference between Japan in 98 and US in 2022 is that, we have just crossed pandemic cycle. The US was literally throwing away stimulus packages as if they have got it covered.

Sometime in future millions of peeps are going to withdraw their gratuity and provident funds from the government and it would intersection of chaos. You never know what’s coming up in the future if this kind of debts continues over the time.

[stompix]

Because they also increase the cost of everything each year by some % factor and thus levy taxes on it to keep the nation going. Idk, but that’s a dirty business and we can’t really compare US and Japan. The US has always been ranked first for the GDP in comparison with any other nation while over the time public debts will also matter.

First, Japan has suffered from deflation so the whole increase was simply not happening.
Second, why not compare them, Japan is a 5 trillion economy that ranks 3rd in the world with one of the highest GDP per capita, so what would be a real argument for not comparing them?

The difference between Japan in 98 and US in 2022 is that, we have just crossed pandemic cycle.

And? The point still stands, we have a country that has managed to get over a GDP-to-debt ratio of 200%  over 14 years and as you can see despite going through the same pandemic is still acting the same, actually welcoming inflation, which barely managed to hit 4% and is set to decline again.
You do realize they have gone tough the 2000 recession,  the dot com bubble, the 2007 crisis, and the 2020 crash just like everyone else and we don't see the same panic of Japan collapsing? This shows just how biased the world is when just because they envy and hate the US they try to ignore how others have dealt with these issues for decades. Nigeria has a GDP-to-debt ratio of 20% Canada has exceeded 100% with consolidated debt, let's do a quick poll about where you would want to start a business or live 

Sometime in future millions of peeps are going to withdraw their gratuity and provident funds from the government and it would intersection of chaos.

Yeah, somewhere in the future which can be 1 month from now and 100 years, in which case I have to ask, do you honestly make your financial planning based on what might happen in 2060?

[franky1]

the US cannot pay off its debt

it has $31trillion debt. but only has a treasury income of about $1trillion in a year

what they do is "interest only" which they can set aside as long as they dont meet the debt ceiling that obligates them to start paying down the debt or put US into bankruptcy

however the ceiling is not a fixed height roof. its just a internal measurement that gets restructured every 1-2 years

it was supposedly meant to be linked to not outpace XX% of GDP but even that rule has been thrown out the window

[Fortify]

I did not find any topic talking about this matter, and since it is a problem that will come to the fore during the next month, I decided to create this topic.

The federal debt limit of the United States was set more than a century ago, and some may believe that setting a debt ceiling means that obtaining debt will be more difficult, but the process aims to facilitate government access to debt, provided that it does not exceed a certain ceiling, and then there must be legislation that allows them to exceed that roof.

Disagreements over the debt ceiling caused two shutdowns of the federal government and a loss of trillions of dollars, which is likely to happen and could cause a bigger crisis, especially with winter and the bad economic situation that we all know.

The debt limit has been set at $31,381,462,788,891.71, or just under $31.4 trillion, and the government is close to reaching this limit even before expectations that it would happen during the year 2024, but we will reach that limit during the year 2023.

What do you think and the possible effects if the United States defaults on its debts or its credit rating is downgraded?

For more and sources https://www.washingtonpost.com/business/whats-the-debt-ceiling-and-will-the-us-raise-it-again/2022/12/02/f6bd2d76-7282-11ed-867c-8ec695e4afcd_story.html

It's a bit ridiculous that this comes up so often and effectively results in the threat of a shutdown of the US government each time, that's a pretty dysfunctional setup that can lead to economic disaster. Especially as we seem to see politicians getting more divided and bitter in recent years, when they should be about compromise and finding common ground to work together. At this point the huge number behind it is almost irrelevant, but I guess it does serve as a reminder occasionally that runaway debt is irresponsible and might sharpen the minds on places they can save money. Funnily enough America is in a rather unique position as the default reserve currency of the world so let's hope they don't throw it away by breaking that trust.

[countryfree]

Repeat after me: There is no debt ceiling. It just keeps on going higher and higher. Same thing in Europe or Japan. Some economists talk about perpetual loans, the creditors will never get their money back, they just get the interest. Forever. It's crazy, but it's good for BTC, so I won't complain.

[serveria.com]

Everybody and his dog understands that this debt is not serviceable, won't be paid off ever. But no one can do anything about it as long as the US own the dollar. They don't seem to give a sh*t about it. Money printer goes brrr... 

[STT]

I'd rate it as a natural problem not subject to limits to what people believe in or not.  There is giant bias to Dollar but that was also true of Sterling previously and other currencies, they have come and gone.   If dollar its not useful to the world it will pass, economics is superior to politics in study because its true regardless of opinion.

US can just decide to print more bank notes and clear her debts most especially the internal debts, except there is a legislation that prohibits her to do so.

Laws really arent the limitation, plenty of countries have printed to excess and suffered from it.  It would not be any different here but US is the global reserve currency, when its printed all countries suffer secondary inflation.  Only a few nations can raise all prices to account for the loss of value, only a few can make that demand vs all others and have their goods bought at that higher nominal price. 
   I think there is a limit, a breaking point and its not about a law to raise a ceiling if anything thats the safety limit.

[franky1]

if a ceiling can grow. its a canopy not a ceiling

[hugeblack]

Simple, we're f*****!
Rember when the US economy coughed a decade ago? The entire world came down with a fever if now it would default on all the debt it would send us into a coma, everything that's happening now will be remembered as the not-so-bad times before the collapse.

Your words are correct, the government will delay paying bond debts, reduce expenses and other temporary solutions until the ceiling is raised, but the question is the impact of these temporary solutions with the chaos that is happening in the market.

the US cannot pay off its debt

In theory, no, but in practice, this has happened several times in history. They will raise the "ceiling" at some point, but such times are ideal for settling scores between the two parties.
What scares me is that they are reaching the limit so quickly. I expect that we will reach a stage where the ceiling is raised annually.

[Wind_FURY]

What do you think and the possible effects if the United States defaults on its debts or its credit rating is downgraded?

The brilliance of the United States' system on issuing debt, and paying for their debt is that they are doing it with their own currency, which they can print when they need it. It's a cheat, a hack, an exploit in the global financial system because the U.S. Dollar is the Global Reserve Currency. For possible effects of a default/downgrade, we don't know, it's probably going to be worse than expected. But what U.S. Congress will defintely do is raise the debt ceiling.

[Flexystar]

You mean there is nothing we can do about it and just watch the show with bucket of pop corn. :-)
If this country is at its peak of debts and world is still moving then there seems no issue with it at all. I don’t think we should be worried about anything. They are government they will simply increase the taxes, print more money, release few government schemes now and then to make us happy and then voila, everything seems normal to an economist and we live happily ever.

This is neither a sinking ship nor it is floating one. It’s just imaginary ship with wings. It just keeps ceiling.

[franky1]

In theory, no, but in practice, this has happened several times in history. They will raise the "ceiling" at some point, but such times are ideal for settling scores between the two parties.
What scares me is that they are reaching the limit so quickly. I expect that we will reach a stage where the ceiling is raised annually.

if you have a visa credit card debt of $25,000
and you pay it off with a mastercard credit card which sets you up to in future have a debt of $31,000
did you effectively pay off the debt.. nope you paid A debt by creating another debt
you are still in debt so debt is not paid off. its just reclassified as... yep debt

what you will find out is that..
since the second world war( the first ATH of debt) most of that got repaid due to the debt incured being used to help out the likes of the UK where the UK then paid back to the US allowing the us to repay its loan.

however using US debt creation to pay for US domestic things. has not had the same ability to later repay the debt.

since 2000 there has not really been any debt reduction schemes to bring the debt down. instead its just toned down how much new debt to borrow at times when it doesnt need more debt. but still they created more debt at other times to pay off older debt thats coming close to its expiry date

[Ulven]

If the u.s were to default on its debts, it would have serious consequences for the contry and the global economy.a default would involve the government failing to make timely payment on its debt obligations, such as treasury bonds.this could lead to a loss of confidence in the government's ability to manage its finances and pay its debts, which could result in higher interest rates and increased borrowing costs for the government in the future it’s  important for the government to address the debt ceiling issue in a timely manner in order to avoid these negative consequences.it will be important for congress to come to an agreement on how to address the debt ceiling and avoid a default or a credit rating downgrade!!

[franky1]

If the u.s were to default on its debts, it would have serious consequences for the contry and the global economy.a default would involve the government failing to make timely payment on its debt obligations, such as treasury bonds.this could lead to a loss of confidence in the government's ability to manage its finances and pay its debts, which could result in higher interest rates and increased borrowing costs for the government in the future it’s  important for the government to address the debt ceiling issue in a timely manner in order to avoid these negative consequences.it will be important for congress to come to an agreement on how to address the debt ceiling and avoid a default or a credit rating downgrade!!

HA i laugh

if they default the fear in the quote above is....... .. ..increased interest on future loans..pfft

its funny because governments and THEIR bank actually want the interest rates to rise to counter inflation caused by the commercial banks.
the penalty is not a penalty when its the economic plan of the future

even funnier part is the US own BoA they can set their own interest rates on the loan between BoA and treasury

when you print your own money you also get to control the repayment plan and also the interest rate of future loans

doing a credit check on yourself means nothing because are the creditor

politicians know this. they do personal loans to themselves not only to escape tax on the income they pass from their side hustle business to themselves but also because they are the creditor they never need to repay

taking money out your left pocket to put in your right pocket becomes meaningless fear because its just putting the same money into the same pair of trousers

[Alpha Marine]

The concept of these state debt is something I don't fully grasps.
Does it work like normal debt? Take for instance, I take a loan of $500 and after a year I pay back $300, that means I owe a debt worth $200. So if I take another loan of $1000, I'll be $1200 in debt. So if I pay of $500, my debt would be $700. Is this how state debt works?

I'm asking this because every single country I've seen, their state debt just keeps increasing. Like they don't pay it off or something?  Why does it just keeps increasing at an alarming rate?
For example, U.S debt was $16.05 trillion at the end of 2012, now we're talking  $31.4 trillion in 2023. How exactly does it work?

[Hydrogen]

What do you think and the possible effects if the United States defaults on its debts or its credit rating is downgraded?

Biggest lenders to the united states like china and japan have taken steps to reduce US debt they hold for many years. Countries around the world have taken steps to reduce their HODL stash of the US dollar, as an international reserve currency. As US debt has risen, smart and savvy players around the globe have reduced their exposure to a worst case scenario, incrementally.

If the US defaults, those hit hardest will be the ones who didn't see it coming. Those who believed they were better off not following current events or the news. Who thought they were "better off" not knowing. This description covers millions of people. Perhaps even billions. Who would be caught unprepared and suffer significantly reduced standards of living.

Is it fair to say bankrupt corporations often sell off assets at severely discounted prices? If the US defaults, its assets might likewise be sold, restructured or redistributed at huge discounts.

The end result whatever it is, must be something most support. Considering the majority of people worked very hard to support everything that led to its eventuality.