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· Posted on
February 21, 2024

The US government are exploring ways to overcome its $31 trillion debt ceiling... so we can 'raise the roof' please?!

The amount the US government earns isn't enough to cover its expenses, and right now, it's facing its 'debt ceiling'.

What's the key learning?

  • Some experts reckon that the US will hit the debt ceiling in less than 3 weeks and that means the country could default on its debts for the first time in history is 3 weeks... if nothing is done.
  • The debt ceiling is a legal limit on how much money the US government can borrow to cover its expenses.
  • Since 1960, the US congress revised the debt ceiling 78 times - but if the debt ceiling isn't revised for a 79th time, the US won't be able to borrow more money to pay its bills.

👉 Background: The US government has a whole range of expenses every single month. We're talking Social Security, Medicare, military salaries, interest on national debt, and more. They also generate revenue from taxes and other sales too.

👉 What happened: The amount the US government earns isn't enough to cover the spending. As a result, the US runs a budget deficit and they need to borrow money to make up the difference. And right now, the government is facing its 'debt ceiling'.

👉 What else: Some experts reckon they'll hit it in less than 3 weeks... And that means the US could default on its debts for the first time in history in 3 weeks - that is, if nothing is done.

What's the key learning?

💡The debt ceiling is a legal limit on how much money the US government can borrow to cover its expenses. Think of it like a $31.4 trillion dollar credit card limit for the entire country - the more money the US borrows, the closer it gets to hitting the debt ceiling.

💡This has been an ongoing problem for the US. Since 1960, the US congress revised the debt ceiling 78 times. But if the debt ceiling isn't revised for a 79th time, the US won't be able to borrow more money to pay its bills.

💡There are a whole range of crafty solutions: like minting a trillion dollar coin, which would literally pay down this debt with an imaginary coin. Or, the government can agree to raise the debt ceiling... again.

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