Treasury Secretary (and former FED Chair under Trump) Janet Yellen notified Congress this morning via a letter to new House Speaker Kevin McCarthy that the U.S. Government has officially reached its debt limit and to act as soon as possible. It's nothing new. It's happened under most Presidents since 1960. Usually, Congress acts to resolve the issue by passing a bill into law to raise the debt ceiling. By doing so, the Treasury can then issue notes to buyers, usually sovereign states, other central banks (including the FED), wealthy corporations and the like, to raise the cash needed to fund government deficits, albeit with interest attached.
New speaker Kevin McCarthy was just elected on January 7, replacing Nancy Pelosi after she resigned from her post, although she remains as a member of Congress after being re-elected last November. Not in a hundred years did it take so many votes (15 in total) to get a House Speaker elected, causing a near-ruckus at the final vote. During this time, something else was also pressing, the debt ceiling.
It's happened a couple of times in the last 5 years alone and usually within 2 weeks or so, a bill was passed into law to raise the debt ceiling, which caps how much money the government is allowed to borrow.
Yellen informed Congress the Treasury has about $400 Billion to maintain obligations until Monday, June 4, 2023. After that, the U.S. Government would go into default and urged Congress to work fast to come to a resolution to raise the debt limit to avoid catastrophe. Some of those 'obligations' are pension funds and social security.
Here's the problem. The FED (and most other central banks) have been raising interest rates, 4% in both USA and Canada just since last spring and we are now feeling the effects of those rate hikes and it's not looking good. CPI (Services Index) and PPI are down and so are manufacturing and housing starts. At a time when even Dr. Michael Burry of 'Big Short' fame says we are by any definition, in a recession, how can the government expect to get higher tax receipts? If anything, they're going down.
Now, the U.S Government is forced to raise the debt ceiling which means an end to the FED's quantitative tightening and adding more numbers to the ballooning debt. In other words, 'turn on the printing presses again
The national debt is presently about to hit $31.5 Trillion
The economy is slowing down and it's unavoidable. World trade is slowing down. The Baltic Dry Index, which measures global shipping rates suffered its worst one day decline right at the start of the new year. This is a major sign we shouldn't ignore.
Less tax receipts and higher interest rates and 'Houston, we have a serious problem'! The new debt limit (which is inevitable) will be reached in no time at all with interest rates this high. If people aren't noticing this now, they likely will in the short term. Too much of the tax receipts will go solely to service the debt.
Does this spell more inflation? I think so. This can has been kicked down the road so often, it's be become a laughable shite show. For now, Congress has until the first week of June to get their '' together.
We're only a few weeks into the new year and already, 2023 is turning out to be an interesting year. I made sure to buy lots of popcorn!
Peace & Love to Everyone.
Earn free Bitcoin using CryptoTab Browser
Purchase any precious metal at
Secure your crypto in a private wallet - Ledger Nano X
Support free speech - join today.
watching livestreams on
- Buy and Sell Bitcoin marketplace
- Professional Quality Videos
Subscribe to my blog and hit the '' button if you enjoyed this post. are always appreciated.
Check out some of my previous posts.
Winter Gardening. Don't let the snow stop you.
M2 money velocity down 50% since peaking in 1997.
Danger: Exercise caution when trading goods for Bitcoin.
Record bullion sales at Perth Mint.
The day Bitcoin hits $1M.
The Great Philippine Onion Crisis!
7 signs we are already in recession.
Sand - The hottest commodity of the 21st century?
Baltic Dry Index suffers worst drop since 1984.
Fill out surveys - earn valuable points!
