RL167 – The Debt Ceiling Crisis: What You Need to Know
In this episode of the Retirement Lifestyle Show, Erik Olson, Roshan Loungani, and Adrian Nicholson break down the debt ceiling crisis in the US. They discuss how government debt should inform your investment decisions, the risks of the US Treasury not raising the debt ceiling, and what to expect in the coming months.
[00:00] Introduction
[02:20] What is the Debt Ceiling?
[04:35] Risk of Not Raising the Debt Ceiling Fast Enough
[08:50] Government Debt Vs. the Country’s GDP
[11:50] The Time and Place for a Debt Conversation
[15:56] What to Expect When the US Hits Its Debt Limit
[19:31] Interest Rates and Borrowing Costs
[22:45] Is Cash Now King?
[24:34] Parting Thoughts
For more links and the full show notes keep scrolling down!
Roshan Loungani can be reached at roshan.loungani@aretewealth.com or at 202-536-4468.
Erik Olson can be reached at erik.olson@aretewealth.com or 815-940-4652.
Adrian Nicholson can be reached at adrian.nicholson@aretewealth.com or at 703-915-8905.
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Full Show Notes:
What is the Debt Ceiling?
The debt ceiling is the limit that the US Treasury has for how much money can be borrowed. They’ll use that money to finance current policies, pay interest on existing debt, and keep the country solvent. In January 2023, we hit that ceiling, but the treasury was able to take extraordinary measures to extend the time that Congress has to act. Fast forward to May, and Janet Yellen, the treasury secretary, came out and said that we could hit the debt ceiling as soon as June 1st.
The reason the debt ceiling conversation drives a lot of people nuts is that they’re going to approve it. Congress will approve it no matter how much they negotiate and fight or how many American lives will be impacted along the way. As an investor, understand that the debt ceiling will go up. It’s gone up every time. So make your investment decisions knowing that the US government debt will affect interest rates and the cost of borrowing.
All opinions expressed by podcast hosts and guests are solely their own. While based on information that they believe is reliable, neither Arete Wealth nor its affiliates warrant its completeness or accuracy, nor do their opinions reflect the opinion of Arete Wealth. This podcast is for general informational purposes only, and should not be regarded as specific advice or recommendations for any individual. Before making any decisions, consult a professional.