What Is the Debt Ceiling and Does It Really Matter?

Raising the debt ceiling. It’s a frequent source of debate. However, as often as it grinds Congress to a halt and is debated on the news, what is the fuss all about? Does it really matter? Learn more in this episode of USMR Market Insights with Patrick Brunson.

What Is the Debt Ceiling and Does It Really Matter? – Video Transcription

Patrick Brunson:               00:00

Time and time again the national debt ceiling becomes a hot topic in public discourse. It dominates news cycles and it looms overall considerations of national spending and occasionally brings Congress to a standstill. However, since the debt ceiling was first created, the government has never defaulted on payment. This is despite the federal government having budget deficits for 44 of the past 48 years, which brings up the question, does the debt ceiling really matter and what can happen if the government has to default on paying loans? The federal government's budget is proposed by the executive office and approved overtime by a series of congressional bills. This process is separate from raising the debt ceiling, which is enacted by Congress when the Treasury approaches the debt limit, Congress almost always raises the debt ceiling to match the government spending needs. It has been doing so and has raised 87 times since 1959 deciding to not raise the debt ceiling has been a negotiation tool used by congress in the past. Recent instances of the debt ceiling almost not being passed included. The 2011 debt ceiling crisis, as well as the one in 2013 ultimately, however, has always been passed. If Congress is not able to pass a raise, the government will go into default. A default of US debt payments would most likely create financial chaos. Both domestic and foreign markets depend on treasuries for collateral and as a reference price, if that stability is lost an unprecedented and cataclysmic crash of the economy could occur.

Patrick Brunson:               01:38

So for a better understanding of issues that many experts say have caused market crashes in the past, please call the number on your screen and get U. S. Money Reserves latest special report, U.S. Stock Market Crashes: Lessons from the Losses. This report provides many of the causes of previous market crashes. So please click on the link below or call the number on your screen right now to get your copy and please give us your thoughts and share this video. If you're watching us from YouTube, please subscribe to our channels that you don't miss a single episode. I'm U.S. Money Reserve's, Patrick Brunson, and thank you for watching Market Insights.