The Debt Ceiling

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avatar of @steemychicken1
3 days ago - 2 minutes read

Lately, all I have been reading about is the ongoing negotiations between President Biden and the leaders of the Republican Party regarding raising the debt ceiling of the US government. These negotiations have been taking place for several months now, and we have sporadically seen statements from US officials about the possibility of not reaching an agreement and forcing the government to default on its loans. image.png source

What is the Debt ceiling The debt ceiling is basically a limit set by the U.S. Congress on the amount of money that the federal government can borrow to finance its operations and meet its financial obligations. It represents the maximum amount of debt the government can accumulate. Once the debt reaches the established limit, Congress must take action to raise or suspend the debt ceiling to avoid a potential default. The whole point of the ceiling is to prevent the US government to accumulate massive amounts of loans just like they already have done over the past years. But how possible is the scenario for the US congress to let the government default on it's loans? My belief is that it is slim to none because that would be political suicide , the are just trying to maximize their leverage and gain the most out of a potential deal and they are also keeping alive the conversation of who is to blame. The and the White house are in a constant communication but just like any other negotiation Biden does not want to give anything and the Republicans want to take everything they will probably meet in the middle. But what if they don't come to and agreement ? image.png source

A potential default by the United States on its debt obligations would have severe consequences for the global economy. Think of 2022 - 2008 1929 combined it would be the total collapse of the modern world economy and the domino effects would disrupt global trade, destabilize currencies and spread panic and fear like never seen before in the markets. Something like the end of the world. If you ask me the end of the world right now would come of all Nuclear powers fire at each other or the US goes Bankrupt.

Of course before all that can happen the government would probably take actions and initiate a government shutdown. In government shutdown, non-essential government services and activities are temporarily suspended until funding is restored. This means that certain government agencies and departments may cease their operations, and employees may be furloughed or required to work without receiving their salaries until the shutdown is resolved. This scenario is to make republicans stronger in the eyes of the voters since the presidential elections are coming.

So my take to all of this is that an agreement is closer than the are letting us believe!

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