Will The Debt Ceiling Kill Crypto?

over the past couple of weeks you've probably seen headlines about how democrats in congress were recently able to cut a deal with republican lawmakers to avert a government shutdown well at least until december 3rd you also might have seen countless articles about joe biden's ambitious 3.5 trillion dollar spending plan as well as a bipartisan infrastructure deal it's safe to say the government currently has their work cut out for them and the clock is ticking behind all the smoke and mirrors there's a much larger problem at hand that needs to be handled as soon as possible the debt ceiling but does this affect crypto let's get it welcome to bitboy crypto home of the bit squad the largest and greatest crypto community and all the interwebs my name is ben every day on this channel i show you how to make money in crypto if you like money and crypto then make sure to hit that subscribe button in this video we'll discuss the details of the debt ceiling how it has affected the markets in the past and ultimately how this issue could impact the crypto community the debt ceiling this refers to the debt and financial obligations the u.s has already accrued this includes things such as paying interest on the country's debt or paying for previously authorized spending on things like social security benefits or paychecks for our troops to be clear although it might sound like it the debt ceiling is not a tool that authorizes new spending that is handled in completely separate legislation such as a bill for the next federal budget the debt ceiling is simply a limit to the amount of money the us government can borrow in order to pay its debts before we take a deeper dive into this highly controversial political topic it's important to state the fact that here at bit boy crypto we do not take sides our primary goal is to inform and educate the bit squad on relative news that impacts the financial community so what's the biggest difference between the us government and the lannisters a lannister don't say it prior to the establishment of the debt ceiling congress was required to approve each issuance of debt in a separate piece of legislation during world war one congress created the debt ceiling through the second liberty bond act of 1917.

The ceiling or limit was set at 11.5 billion dollars in order to simplify the previous time consuming process and enhance borrowing flexibility with world war ii looming in 1939 congress created the first debt limit and set it at 45 billion since its creation congress and the president have modified the debt limit 80 times the last president in u.s history to leave the oval office with a debt level lower than it was when he started was calvin coolidge back in 1929. you can see the numbers for u.s debt by president for yourself at self.inc over time the debt ceiling has been growing exponentially from the 1980s to the 2000s it increased from 1 trillion to over 12 trillion dollars dubiously named budget control act of 2011 raised this ever-growing number to 16.4 trillion the battle over the debt ceiling and budget deficits in 2011 contributed to the s ps downgrading the u.s credit rating for the first time ever this also caused a 17 percent fall in stock markets lawmakers have suspended the debt limit seven times since february 2013 the most recent suspension the debt ceiling was under the bipartisan budget act of 2019.

It was reinstated on august 1st this year last week the house of representatives passed a bill that would yet again suspend the debt limit despite their efforts the bill got shut down shortly afterwards by republicans in the senate a protest likely traced to the massive 3.5 trillion infrastructure package that's currently working its way through the house of representatives the current debt ceiling is a staggering 28.4 trillion dollars this year the interest payment alone on the national debt will cost 300 billion dollars that means that every citizen of the u.s is on the hook for over 80 thousand dollars of government debt you follow the u.s national debt in real time at usdetclop.org the link is down below in the description now according to the us debt clock if things continue the way they're going in 2025 the national debt is rejected to be 48 trillion dollars that's more than triple the gdp of china it's common knowledge that the u.s spends more money than it takes in the treasury department finances that extra spending money by selling government securities bonds and utilizing tax revenue congress controls the debt ceiling by limiting how much the treasury department can borrow so it can pay for the programs it's legally obligated to fund for social security and medicare to military salaries tax refunds national interest payments etc common analogy to the debt ceiling is like a credit limit on a credit card a maxed out one of that says the inception of the debt ceiling the us government has never once defaulted on its debt payment this is why u.s treasuries are one of the most popular risk-free assets on earth since the 1940s much of the global economy has been built around the risk-free nature of u.s bonds treasury department who is in charge of making sure the government always pays its bills on time has been deploying extraordinary measures to meet those obligations in order to prevent default treasury secretary janet notel and yellen recently told lawmakers that the government will run out of cash to pay its bills on october 18th the us says 80 billion worth of liabilities due just this month felon yellen said a delay on raising the debt ceiling would not only make the federal government look irresponsible it would likely cause irreparable damage to the u.s economy and global financial markets she also recently stated that she is on board with doing away with the debt ceiling altogether you can do away with your fears and questions about crypto join the bid squad by smashing that like and subscribe button but simply put our options here are to suspend the debt ceiling again raise the debt ceiling again do away with the debt ceiling altogether or default on our debt payments for the first time in u.s history all these outcomes involve us delaying the inevitable the reality is the higher the debt goes up the more painful the payback will eventually be based on simulations of moody's analytics model of the us economy the downturn of default would be comparable to that suffered during the 2008 financial crisis that means real gdp would decline almost four percent peak to trough nearly six million jobs would be lost and the unemployment rate would surge back to close to nine percent stock prices would be cut almost in one-third at the worst of the sell-off wiping out 15 trillion dollars in household wealth treasury yields mortgage rates and other consumer and corporate borrowing rates would spike even then the returns would never return to where they were previously if we were to default the u.s treasury securities no longer would be risk-free and future generations of americans would pay a steep economic price to bring back the credit card analogy if you were a bank and a customer owed you 28.4 trillion dollars would you let this customer open a second credit card and add 3.5 trillion more dollars to the debt yes they never missed a payment but something's got to give soon if the government cannot borrow money to continue paying for programs there will be real world effects for millions of americans here are some of those potential effects according to janet yellen 15 million seniors could stop receiving social security payments or see delays 30 million families would stop receiving president joe biden's expanded child tax credit payments or see delays u.s military service members could stop receiving paychecks veterans benefits could stop or be delayed postal workers and federal employees could stop receiving paychecks the united states credit worthiness could be downgraded spiking interest rates which would raise mortgage car and credit card payments making it harder to buy a house or a car doubt in the typically reliable u.s currency could tank the markets hurting 401ks and other investments for instance the s p 500 lost 17 percent in the month surrounding the last debt ceiling standoff in 2011.

Fema funding for hurricane and wildfire victims could stop public health funding for pandemic mitigation efforts could be cut off child nutrition programs and other food assistance could stop so you're basically darned if you do darned if you don't clearly defaulting shouldn't be an option but if that was to happen for the first time in u.s history that would definitely count as a black swan event that could prematurely send the markets into bearish territory for the foreseeable future another popular idea circulating the internet to help the government alleviate the pressure of the debt ceiling would be to mint a trillion dollar coin this idea could be its own video by itself and it could happen in the distant future but i'll save you the details considering the white house has already publicly rejected the idea of the trillion dollar coin on september 20th according to philip wallach american enterprise institute senior fellow to cnn he said at the end of the day a fiat currency stability doesn't rest on anything other than the people's belief that money is worth what they've believed it to be worth doing something like the trillion dollar coin is a great way to get people to think that the dollar is not such a great currency so what does this mean for crypto while i'm sure someone is making a trillion dollar mean coin for the laughs the short-term effects of more debt will be bullish for all crypto the dollar will continue to lose value and bitcoin will go up in price but the psychological impact of going into more debt and the possibility of deflation making that debt even more painful to pay back could send all economies to the wall including crypto but that moment for crypto will be its day to shine and as the traditional finances burning in wildfire waiting for the government to get attacked together crypto will move in faster than a dothraki hoard and change finance forever and the other day what makes bitcoin ethereum and other all so powerful is that they are a global store of value regardless of each country's state of economic affairs crypto maintain and appreciate over time on a global level this is why china doesn't want its people investing in bitcoin they want to keep their money in their central currency to maintain power over their citizens we don't have control over what happens in china just like we don't have control over the outcome of the debt ceiling what we do have control of is where we decide to store our own personal value in two thousand thirteen is equivalent in purchasing power to a hundred and seventeen dollars today in october 2013 one bitcoin was worth 196 dollars and two cents today one bitcoin is worth forty seven thousand six hundred and eighty six dollars according to gemiini merely 14 of the american population currently own crypto assets you do the math lord varus once said power resides where men believe it resides it's a trick a shadow on a wall and a very small man can cast a very large shadow that's all i got be blessed [Music] you

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