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🌟"Decoding the US Debt Ceiling in Simple Terms"🌟
The US government is currently in a tough spot because it has reached its debt ceiling, which is around $31.4 trillion💸💼
Let's try to grasp what the debt ceiling means and why people are talking about it🧵👇
#UsDebtCeiling
The US government is currently in a tough spot because it has reached its debt ceiling, which is around $31.4 trillion💸💼
Let's try to grasp what the debt ceiling means and why people are talking about it🧵👇
#UsDebtCeiling
1) What exactly is the debt ceiling?💰❓
Think of it as a limit or a cap on how much money the government can borrow.
Just like your parents might set a limit on how much money you can borrow from them, the government also has a limit on how much money it can borrow.
Think of it as a limit or a cap on how much money the government can borrow.
Just like your parents might set a limit on how much money you can borrow from them, the government also has a limit on how much money it can borrow.
When the government spends more money than it collects in taxes, it needs to borrow money to make up for the difference.
However, there is a maximum amount of money that the government is allowed to borrow, and that's the debt ceiling.
However, there is a maximum amount of money that the government is allowed to borrow, and that's the debt ceiling.
2) Then, who decides this maximum limit or ceiling? Can it be raised?📈
US Congress decides the maximum debt ceiling and has the power 💪 to raise it.
Since, 1960, congress has increased the limit 78 times - 49 under Republican and 29 under Democratic presidents.
US Congress decides the maximum debt ceiling and has the power 💪 to raise it.
Since, 1960, congress has increased the limit 78 times - 49 under Republican and 29 under Democratic presidents.
3) But, what happens if Congress doesn't agree on raising the debt ceiling?
The consequences could be dire.
Treasury Secretary has warned that without more borrowing, the US will not have enough money to meet its financial obligations as soon as 1 June.
The consequences could be dire.
Treasury Secretary has warned that without more borrowing, the US will not have enough money to meet its financial obligations as soon as 1 June.
⚠️ Well, the government would no longer be able to pay the salaries of federal and military employees, or pensions.
⚠️ In addition to this, national parks and other agencies would shut down, while companies and charities that count on government funds would be in peril.
⚠️ In addition to this, national parks and other agencies would shut down, while companies and charities that count on government funds would be in peril.
4) What happens if the US government defaults on the interest payments of its debt?🧠
🔶 A default could lead to a significant increase in interest rates on US T-bonds, as lenders would demand higher returns to compensate for the increased risk.
🔶 A default could lead to a significant increase in interest rates on US T-bonds, as lenders would demand higher returns to compensate for the increased risk.
🔶 Furthermore, a default could lead to a loss of confidence in the US dollar, which is the world's reserve currency.
This could cause a decline in the value of the dollar and an increase in the cost of imported goods, which could ultimately lead to inflation.
This could cause a decline in the value of the dollar and an increase in the cost of imported goods, which could ultimately lead to inflation.
🔶 A default could cause turmoil in financial markets which could potentially trigger a global financial crisis and even lead to a sell-off in US stocks and other assets.
5) So, the stakes are high, and it's crucial that Congress comes to an agreement on raising the debt ceiling.
It's not just about the United States; it's about the global economy and the millions of people who rely on government programs and services.
It's not just about the United States; it's about the global economy and the millions of people who rely on government programs and services.
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If you liked the thread, consider following my Twitter account @Abhishe27960014 for more updates and insights.
Your support is greatly appreciated.
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