The United States government has a long-term deficit, and the government must issue bonds to borrow money. The specific implementation is the Ministry of Finance, but it must be implemented within the total debt approved by Congress.
According to statistics, since the end of World War II, the US Congress has revised the debt ceiling 78 times, with an average increase every nine months. The latest debt ceiling is $365,438 +0.4 trillion, approved on February 6, 2026, 5438+0. 1.06. On June 65, 2023, 438+0.09 has been used up, and it is necessary for Congress to raise the ceiling before issuing new bonds.
According to the Wall Street Journal, Yellen pointed out in early May that if Congress does not raise the debt ceiling, the US government may not be able to pay all its bills on time on June 1 day at the earliest.
What's the impact?
The consequences of the crazy printing of money in the United States are unimaginable.
The debt ceiling has been raised. In other words, it is necessary to start "throwing money" again. If not, the Fed will have to raise interest rates. This is also why we see that the Fed is under such great pressure and has not let go of the "suspension of interest rate hikes".
Reduced demand for funds: raising the debt ceiling in the United States means that it can continue to borrow funds and avoid the situation that it cannot fulfill its debts. This will ensure that creditor countries such as China will continue to receive repayment of interest and principal, and ensure the stability of capital flows.
Risk of asset depreciation: If the US debt problem causes the market to worry about the depreciation of the US dollar, it may lead to the decline in the value of US dollar assets held by creditor countries such as China, which will have a certain impact on their economy and foreign exchange reserves.
Changes in investment environment: The U.S. debt problem may lead to uncertainties and fluctuations in the global financial market, which may affect the investment environment of creditor countries such as China. Investors may be more cautious about American assets, including treasury bonds and other financial products, which may have a certain impact on capital flows and investment decisions.
Impact of global financial markets: As one of the largest economies in the world, the debt problem of the United States may have a chain reaction to global financial markets. The fluctuation of market sentiment and the uncertainty of investors may lead to the fluctuation of stock, bond and money markets, and then affect the stability of the global economy.
Although historically, the requirements of the US government and the Ministry of Finance to raise the debt ceiling have always been met, the process is usually tangled and will have a great impact on the financial market.
As the deadline for raising the debt ceiling approaches, investors may become more and more anxious, which will shake the market's confidence in the US government and may lead to a decline in US debt and push up short-term interest rates. As a global risk-free interest rate, the upward trend of US bond yield will also drive the fluctuation of other investment products to increase and aggravate risk aversion.
The rise in short-term interest rates and the turmoil in financial markets will significantly increase the financing costs of the US government and have an impact on economic fundamentals, thus affecting the Fed's monetary policy.