Topic: US with problems to raise the debt ceiling... again - page 3. (Read 456 times)

And now here is the Treasury Secretary, Janet Yellen, warning that the government is now about to run out of cash by October 18. That's just a little more than two weeks from now. Even with that bleak possibility, however, the republicans and the democrats have yet to meet halfway about the issue of raising the debt ceiling.^[1]


It seems they haven't yet. The standoff continues and reconciliation is nowhere to be seen in the near future. And now the democrats are resorting to another way of avoiding shutdown. They are now trying to pass the reconciliation bill, which wouldn't require a vote from a single republican for as long as every democrat votes yes to it. However, it seems they are still facing a hard time selling the same to every single democrat in the senate. It appears Senators Kyrsten Sinema and Joe Manchin are opposed to it.^[2][3]

[1] https://edition.cnn.com/2021/09/28/economy/debt-ceiling-deadline-yellen
[2] https://www.cbsnews.com/news/whats-in-reconciliation-bill/
[3] https://www.cbsnews.com/news/government-shutdown-2021-senate-bill-vote/

I thought they already voted and passed it.  Did they not?  I'm certainly against that bill, and I contacted my senators about a month ago and voiced my opinion on it.  My state is blue, so I'm not keeping my hopes up if indeed they haven't voted on it yet.

And it's amazing that this would follow all the money printing and stimulus and unemployment benefits--basically the government creating money and giving it away like it was cheap candy.  I have no idea what the morons in the government are going to do, but frankly I'd rather just take the consequences sooner rather than later.  All they've been doing for years is kicking the can down the road, and they can't keep doing that indefinitely.

USA could increase the debt ceiling as much as they want and as long as people keep giving USD a lot of value and they do not care about the debt they have, then it will not be a problem for them. If another weak nation did what USA is doing right now then the value of that nation's currency would be destroyed, but when USA does it then it is nothing at all, which is the biggest advantage they have.

If it was a problem and they couldn't do it then they would have avoided it as well, but since they are doing fine then it becomes not a problem for them at all. I personally believe that we should not be shocked if they increase it again in few years and then again and again because nobody does anything to stop them.

I see that the political conditions between these parties are only just playing their roles, no one is really carrying out their responsibilities and authorities.  Due to the fact, every decision between parties is only limited to bargaining for interests.  Because basically, it's not the people who focus on them but their own power.  Debt and policies only become their instruments to strengthen their power in personal and group interests, not in the name of society.

Yes, every big country owns a lot of debt from each other, but China is the biggest holder of US treasury bonds and even after already letting go of a lot they still own almost 40% more than the next.

The only reason US debt going higher does not seem like a legitimate concern for economists is because every other country (including China) is also putting up debt every year,,, just not as bad as US, who loves going to war for made up reasons. I will not be surprised one day they go to war with Bitcoin  

If the US government hit the debt ceiling, then they are not allowed to borrow any more money to fund government expenditure. There are a variety of temporary measures they can enact to free up some more money to continue to pay their expenditures for a short period of time, in the range of a month or two, but once these run out, the government essentially defaults on its debt. It's unclear exactly what would happen here, but it would likely involve huge cuts across the board in everything from healthcare to education, salaries not being paid, millions of jobs losses, and a huge financial crisis. There would also be huge implications around the world if the government of the primary reserve currency in the world effectively said "Uhhh yeah, we can't honor its value anymore."

Yes, the difference is not huge, as it won't be with any fiat currency, but it is significant enough over long periods. 20 years ago a US dollar bought around 1.6 Swiss Francs, today it only buys around 0.9. 20 years ago a Euro bought 1.49, today it buys 1.08. You'll see similar (or even worse) ratios with CNY, JPY, GBP, RUB, etc.

Obviously I don't disagree that the USD is far more widespread and widely used, but saying it is the most stable fiat currency is just plain incorrect.

It is not such a big difference, if you compare to some other small currencies from Europe you will see it's nothing special, against the Czech crown it was 1:20 in 2005, it's 1:23 now, even against the euro it was 0.92 5 years ago it's still 0.92 today.
Besides, on long term even against the USD there is nothing major, just a 4% increase, of course with his and downs but for the last decade, the most traded currencies have somewhat kept the same ratio.

If we compare it with currencies from the so-called third world it's pretty damn stable, gaining 2-300% even against countries who are not at war or under sanction or went through a revolution, I think all south American currencies have lost at least 3x compared to the USD in the last ten years.

Deficit, debt, spending, inflation, people would still put more faith in the economy of the US rather than in the Russian economy who has barely 10% debt to GDP ratio but who has a habit of going bankrupt. Romania has 30% ratio, one of the lowest in the EU, and interestingly they have a homeownership of nearly 90%, what would you buy dollars, euros, or Romanian lions?


To be honest, considering the amount of Americans that were screaming they will immigrate to Canada if Trump becomes president and how many anticipated another catastrophe and collapse, I must say he did pretty well, he actually managed to raise the employment rates (I never look at unemployment rates as I consider that misleading) a thing Biden will have no way to accomplish, not with millions of immigrants coming into the country, no matter how many trillions he will spend with that stupid bill he will not be able to create 5 million jobs on top of the lost ones and adding the population ratio.

It is political theater. There is nothing in our Constitution which requires a debt ceiling. Both sides rack up debt when they are in power, but then Republicans threaten to default on that debt (and potentially force millions of people in to poverty) when they are not in power to try to score points against the Democrats. And yet some people still think Republicans are "fiscally responsible".

Obviously Trump's very poor overall record on jobs isn't really a fair comparison due to COVID, but even before the pandemic, Trump's record on job was distinctly average when compared to the last 100 years.

Widely used, maybe. Stable? Not even close. Take a look at the ballooning deficit, debt, debt ceiling, Federal Reserve balance sheet, etc. The most stable fiat currency is probably the Swiss Franc (CHF).

On top of that, the US Dollar is considered as the most stable fiat currency, and many of the countries that don't have their own currency (El Salvador, Ecuador.etc) use USD as default national currency. And this makes the situation even more interesting. The Federal Reserve can print unlimited amounts of banknotes, thereby increasing the inflation rate and then distribute the surplus funds among US citizens. However, those using USD in other countries will suffer from it, because the purchasing power of their savings will go down.

Correct, the US government has something that no other government has and that is that its fiat currency is the currency used as the reserve currency of the world, this means that they can get away with things that no other government can, they can reach levels of debt that no other country can because if the countries that are holding their currency as a reserve currency try to say anything about it then their reserves can go to dust if the US decides to keep printing more money, however I really think we are reaching a critical point in which it is possible that countries begin to decide to use their reserves, and this could create hyperinflation in the US as we have never seen before as that money finds its way back to the US.

I don't think that there will be an issue with raising the debt ceiling.

They have demonstrated over and over again that they are willing to do this.

Perhaps it will take a while, but at the end of the day they will want to continue borrowing at astronomical figures at incredibly low rates, and will not let this roadblock push them back.

Trump claimed that his policies discourage American companies to shift jobs abroad, thereby securing native jobs (especially in the blue-collar sector). I will give you one example. In 2017, Trump forced Ford Automobiles to cancel their plans to open a car manufacturing unit in Mexico, and instead invest that amount in Michigan. And regarding Obamacare, Trump has always argued that it was putting a huge strain on small businesses. In the rust-belt states, even in 2020 Trump performed much better than what opinion polls predicted (especially in states like Wisconsin and Pennsylvania).

It is crazy that this happens so often, it seems to be every year or two now. What sort of country allows their system of government to bring the whole country to a halt as the (only) two political parties, full of rich old people, engage in some pathetic brinkmanship in order to try and extract the most leverage out of the other side while receiving the least bad publicity. Fixing this constantly reoccurring situation should be the absolute priority of all US politicians because it causes so much unnecessary anguish repeatedly. America already has enough problems without millions of people wondering if they will wake up on a certain date and possibly be going to work unpaid when they have regular bills to clear.

I don't think that's true either. In terms of percentage, outside of the two World Wars, Reagen added more to the debt by a long shot than any other president, with Bush 43 coming 2nd.

GOP handing out welfare benefits? What? The GOP consistently push to cut Medicaid, Medicare, and a variety of social security programs such as SNAP and TANF. Trump's big tax cuts, which contributed to a big chunk of his increased deficit prior to COVID, largely benefited the wealthiest in society - https://www.taxpolicycenter.org/publications/distributional-analysis-conference-agreement-tax-cuts-and-jobs-act/full. The top quintile made a saving of over $7,000 per year, with the lowest quintile making a saving of only $60 per year. How you can say that is catering to blue collar workers I don't know.

Finally this news has reached our ears. From the point of view of the increasingly clear US economic downturn, Biden seems unable to overcome the upheaval by increasing the competitiveness of the global economy. Adding debt is the last resort? embarrassing isn't it?

Of course, it cannot be separated from the various effects that will later have a more dominant impact on the government shutdown and also of course as the point of origin to witness in US history leading to the financial crisis. But don't forget that even during Trump's time, the same thing happened, namely for 35 days to be exact in December 2018.

As Senator Schumer put it "It's playing with fire. Playing with the debt ceiling is playing with fire and putting it on the backs of the American people" Lol what's up with the US becoming increasingly estranged from the power of the powerful world economy?

This is a heavy blow after Covid 19 America has had some kind of difficulty in recovering the economy.

The GOP used to be a party of "fiscal responsibility" until two decades ago. Back then, they used to depend heavily on suburban white voters and a seizable chunk of their votes used to come from white collar workers. However, suburban voters have moved towards the left recently, and it is more noticeable among the female suburban voters. The Iraq war, which was initiated by George W Bush just destroyed whatever reputation they had in fiscal responsibility.

And by the time Trump was voted to power, the core support group was white blue collar workers. Suburban areas, where the GOP used to receive 60% or more of the votes now vote >60% for the Dems. Under these circumstances, it makes perfect sense for the GOP to cater to their core support group. And doing that means handing out more welfare benefits, thereby widening the fiscal deficit.

How could the Euro who was launched in 1999 lose value after an agreement that happened half a century earlier?  

As for the debt ceiling,

Foreigners hold only 30% of the debt, the US can still run its debt even without them with just the the Federal Reserve.
Besides, none of that country would want to see the $ collapsing, 2007 was a clear example of what happens if the US is in trouble, if the $ goes down so does China as it's so dependent on the US for its exports, where are all the goods going to go, what are your going to dow with all the workers and all the companies? No country other than NK really wants the $ to collapse for real, politics and briefings and propaganda are one thing, the situation coming real would hurt everybody eveywhere.

There are no restrictions on printing money and debt due to the decision of the former US president himself who decided not to be bound by Breton Woods, since then the freedom of governments in all countries to manage their version of the financial system is not controlled.  The US as a country whose currency is the standard in all countries, has inflated its economy through debt.  Likewise other countries that follow the policies taken by the US.  Funnier is the current condition, it seems that it is normal for the government to issue bonds and pay their maturity by issuing new bonds again.  And so on, so that this debt will continue to increase and will never decrease as long as the system used is still floating value like this and does not have underlying assets.

The ever increasing debt and printing ever more money to deal with it is obviously a problem, but painting the GOP as the party of fiscal responsibility is laughable. They borrow and print more with abandon when they are in power, and then blame the Dems for it when they are not in power. Republican presidents have overseen the largest increases in the deficit and in the debt over the past 40 years, whereas both Clinton and Obama greatly reduced the deficits they inherited, with Clinton being the only president in the last 40 years to turn a surplus.

The debt ceiling was increased three times under Trump. If Trump was in office just now, Republicans would have no issues increasing it again. They are doing this for their own political gain, not for any concern about our ballooning debt. Everyone knows it will be raised eventually, since the US defaulting on its debt would ruin the country, but Republicans have to play their stupid little games first.

Not only China, but Japan and many other countries own a lot of U.S. government bonds, too. The USA is immensely dependent on foreign countries. If at some point these countries decide to stop buying U.S. government bonds, the U.S. will no longer be able to issue any debt at all in this form without its currency collapsing.