Will the U.S. Default? Debt Ceilings, Government Shutdowns, and the National Debt

Money For the Rest of Us

J. David Stein

Investing, Investing Podcast, Business, Economics, Economy

4.5 • 1.4K Ratings

🗓️ 29 September 2021

⏱️ 29 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Why the U.S. is closing in on both a debt default and a government shutdown.

Topics covered include:

How a government shutdown differs from a debt ceiling crisis
Why hasn't Congress passed legislation to fund the government and raise the debt limit
How refusing to increase the debt ceiling could impact Social Security
How big is the national debt and who owns it
Why we never know how much federal debt is too much: Japan vs the U.S.
How federal debt is used and how it has led to financial innovation
Why countries default on their debt
What are some of the challenges with central banks pegging interest rates and monetizing the debt
What could cause the U.S. dollar to crash and inflation to soar

Thanks to Alto CryptoIRA and LinkedIn for sponsoring the episode.

For more information on this episode click here.

Show Notes

America’s debt ceiling is a disaster, though fiscal rules can help—The Economist

Treasury Bulletin, September 2021—Bureau of the Fiscal Service

Major Foreign Holding of Treasury Securities—Department of the Treasury/Federal Reserve Board

Fed official warns of ‘extreme’ market reaction unless debt ceiling raised by Lauren Fedor, Colby Smith and James Politi - The Financial Times

Republicans Are Playing a Dangerous Game With Debt by Michael R. Strain—The New York Times

Explainer: What happens when the U.S. federal government shuts down? by Jason Lange—Reuters

Janet Yellen Says Treasury Could Exhaust Cash Reserves by Oct. 18 if Debt Limit Isn’t Raised by Nick Timiraos and Kate Davidson—The Wall Street Journal

Janet Yellen: Congress, Raise the Debt Limit by Janet Yellen—The Wall Street Journal

Devin Carroll on YouTube

In Defense of Public Debt by Barry Eichengreen, Asmaa El-Ganainy, Rui Esteves, and Kris James Mitchener

Different Types of Central Bank Insolvency and the Central Role of Seignorage by R. Reis

How do central banks control inflation? A guide for the perplexed by Laura Castillo-Martinez and Ricardo Reis—London School of Economics and Political Science

Can the Central Bank Alleviate Fiscal Burdens? by Ricardo Reis—London School of Economics and Political Science

Related Episodes

295: Federal Reserve Insolvency and Monetizing the National Debt

338: The National Debt, Inflation, and the U.S. Dollar—What Could Go Wrong?

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Transcript

Click on a timestamp to play from that location

0:00.0	Welcome to Money for the Rest of Us. This is a personal financial on money, how it works,
0:06.2	how to invest it, and how to live without worrying about it. I'm your host David Stein
0:11.5	today's episode 360. It's titled, Will the U.S. Default, the debt ceiling, government
0:19.2	shutdowns, and the national debt. The U.S. is in the midst of its periodic circus.
0:29.8	The atrix as it relates to the debt ceiling and a potential government shutdown.
0:37.3	The economist newspaper calls the debt ceiling issue the most bizarre of economic
0:42.9	spectacles, a ritualistic threat of economic self-harm. They continue in the name of fiscal
0:50.5	responsibility, the world's biggest economy is flirting with an act of brazen irresponsibility,
0:59.1	a sovereign default. Two things are going on currently right now. If you see the news,
1:04.6	you see talk of government shutdowns, talk of debt ceiling potential default. The debt
1:11.3	ceiling issue is separate from a potential government shutdown related to the fiscal
1:18.3	2022 budget. The U.S. is current fiscal year ends at midnight, this Thursday, September
1:26.0	30, 2021. Without additional funding, many government functions will be shut down. Museums
1:34.5	and national parks will close. Many federal workers won't get paid, about three out
1:40.7	of five workers. The last government shutdown was in January 2019. It lasted 35 days, and
1:50.0	seemed like it was never going to end until air traffic controllers, who were deemed essential
1:56.7	workers were working without pay, started calling in sick, that led to flight delays and
2:03.4	ultimately an agreement to fund the government. That's what Congress is supposed to do to
2:11.1	fund the government. Now, oftentimes they don't have a new fiscal budget passed by October
2:18.8	1st, but they can pass what's known as a continuing resolution to continue to fund the government.
2:25.0	They have not done so yet. The second issue is the debt ceiling. The debt ceiling is the
2:33.4	legal cap that Congress sets on the amount of borrowing that the government can do. The amount
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from J. David Stein, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of J. David Stein and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.