The U.S. Government's Debt Ceiling Shouldn't Be Raised | 3min snip from Money For the Rest of Us

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What Happens If The U.S. Defaults On Its Debt? Here's Why It Won't

Money For the Rest of Us

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CHAPTER

The U.S. Government's Debt Ceiling Shouldn't Be Raised

The U.S. government has never officially defaulted on its debt. It did default a little bit by accident in 1979. Some members of Congress have suggested that the Treasury should prioritize who gets paid. But it would be very unlikely they'd be able to even implement prioritization if it was requested or passed.

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What are the grave consequences if the U.S. debt ceiling isn't increased and the government defaults? What would the Federal Reserve and the Executive Branch do to prevent default if Congress doesn't act?

Topics covered include:

What are the potential impacts of a U.S. default on the stock and bond markets, and the overall economy
What causes the U.S. to have a perennial debt ceiling crisis
Why it is uncertain when the U.S. government would run out of money to meet its obligations
What the Biden Administration could do to prevent a default
What the Federal Reserve could do to prevent a default
Given the ongoing crisis, should you shift assets from stocks to cash?

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Show Notes

The Debt Limit Since 2011—Congressional Research Service

7 doomsday scenarios if the U.S. crashes through the debt ceiling by Jeff Stein—The Washington Post

A debt ceiling default would send the U.S. housing market back into a deep freeze by Jeff Tucker—Zillow

Why is federal spending so hard to cut? — Recurring debt ceiling fights will only be solved by budget reform by Linda Bilmes—Brookings

Debt Limit Default Is Default, Even Under a “Prioritization” Scheme by Richard Kogan—Center on Budget and Policy Priorities

Why I Changed My Mind on the Debt Limit by Laurence H. Tribe—The New York Times

The Trillion-Dollar Coin Might Be the Least Bad Option by Annie Lowrey—The Atlantic

If U.S. again risks default, Fed has 'loathsome' playbook by Ann Saphir—Reuters