USA debt ceiling

Ubbquittious

I realise this will most likely be raised as soon as the customary period of wrangling and mud-flinging between the two parties completes but what happens in the unlikely scenario that it isn't raised? Does all hell break loose? I remember when it was 8tn and people were saying 'Whoa,unsustainable!'

AMKC

The USA is doomed. Its too big of a Country and its gone to hell. It needs to be broken up into smaller countries. Every year they have this pause when they try to increase there depth ceiling and it can go on for weeks with all public services suspended. It's crazy. It would never happen here or be put up with.

Nody

https://www.boards.ie/discussion/2058281953/usa-debt-ceiling

It happened during Trump era as well; basically a lot of state functions shut down. After that it's only a question of coming to a deal basically; in theory USA could be forced to stop paying it's debt and more or less default but that's an extreme outlier. More likely they would stop paying and then pay it back with penalty interest or similar if it would drag out that far (and with the headbangers in congress it could theoretically if some republicans would not be willing to break rank to vote a budget through).

Ubbquittious

https://www.boards.ie/discussion/comment/120174883#Comment_120174883

Or they could do something less drastic like not growing their debt even during the so-called good times

Nody

https://www.boards.ie/discussion/comment/120175148#Comment_120175148

That would require them to stop voting in Republicans who'll promise to cut taxes and fail to cut spending "because people will spend more and we get more taxes back". You can find a detailed discussion based on facts in this blog but in summary a R President is more likely to add to the deficit than a D president (both tend to add to it though).

AMKC

https://www.boards.ie/discussion/comment/120175148#Comment_120175148

Or stop having Wars in parts of the world that do not concern them. Like the 2003 war started by Bush for instance after 9/11. That cost trillions all wasted and what came of it nothing. Iraq is worse than it ever was and so is Afghanistan.

ancapailldorcha

https://www.boards.ie/discussion/comment/120175148#Comment_120175148

No. They're trapped in Jude Wanniski's two Santa Clauses cycle. Basically, the GOP back in the day knew they couldn't compete with the Democrats who at the time were pushing for serious investment in infrastructure and social spending by advocating belt-tightening. The GOP therefore went the way of cutting taxes for the rich - trickle down economics and other hogwash. We've ended up at the point where the GOP causes debt to soar, the Democrats get in and repair some of the damage only for the whole thing to begin again. It's just too late now.

https://www.boards.ie/discussion/comment/120175207#Comment_120175207

Sure but we are where we are. The good news is that the country seems to be more at war with itself. Nations in the middle east and Asia should be safe enough from American intervention for the foreseeable.

AbusesToilets

Don't worry, the Republicans are here to save the day with the elimination of the IRS and a 30% sales tax. Can't see any flaws with that.

Podge_irl

https://www.boards.ie/discussion/comment/120174904#Comment_120174904

Federal govt shutdown should not be confused with failing to raise the debt ceiling leading to a default. The former has been (pathetically) frequent and just related to a failure to pass a budget, the latter unprecedented and its outcome unknown.

Jim2007

https://www.boards.ie/discussion/comment/120174883#Comment_120174883

That's because when it comes to economics we follow the Austrian School unlike the rest of the anglo sphere world, although heaven knows who we managed to get that one right. When advising private clients on bond purchases we go with: Switzerland, Germany, Austria and Ireland. In fact all through the last recession we pushed Irish bonds. The logic being very simple - they are northerners and so can be relied on to stick to their word, they have been a net exporter for decades and if you are selling more than you are buying you will eventually work your way out of any financial difficulties. And the other rule is never invest where the olive grows.