What are Debt ceiling?

04 Mar, 20242 mins read
What are Debt ceiling?

What is a Debt Ceiling?

The debt ceiling is a legally imposed ceiling on the entire debt that the federal government can legally acquire to pay for its operations. It is imposed by Congress. It refers to the greatest amount of unpaid debt that the federal government is allowed to take on to carry out its responsibilities, such as paying bills, servicing its present loans, and offering funds for several projects and services.

The concept of a debt ceiling was first put forward by Congress in the early 1900s as a way to control borrowing by the government. The debt ceiling was lifted multiple times through the years to satisfy the federal government's increasing demands and manage financial challenges including wars, major spending projects, and downturns in the economy. The Treasury Department lacks the ability to sell fresh debt when the debt ceiling has been met so as to fund government expenditure that surpasses the maximum allowed.

At end-September 2023, India's external debt was placed at US$ 635.3 billion, recording an increase of US$ 6.4 billion over its level at end-June 2023 Economic aspect: Financial markets and the economy might be impacted greatly if the debt ceiling is not increased. Because the Treasury would have to borrow additional funds to

 meet its debts, it might end in a government shutdown. A U.S. debt collapse could also harm confidence in investors, begin an economic depression, and possibly send the nation into recession.

Political aspect: the debt ceiling often stems from party-based disagreements among politicians about fiscal policy objectives, spending limits, and strategies to decrease the deficit. Political standoff and the potential of default are concerns created by the long and contentious debt ceiling discussions. The debt ceiling has often raised concerns and fluctuation in fiscal policy in recent years. While short-term fixes like bans or delays have been used to prevent approaching crises, permanent solutions to basic issues in the federal budget are still difficult. The debt ceiling is a complex and controversial topic with broad implications for the financial system, the political system, and the economy. Though the government has to raise the debt ceiling to fulfill its responsibilities, to put the entire country on an affordable route forward, authorities have to solve core budgetary difficulties






disclaimer: the information provided in this blog is for general informational purposes only. it should not be considered as personalised investment advice. each investor should do their due diligence before making any decision that may impact their financial situation and should have an investment strategy that reflects their risk profile and goals. the examples provided are for illustrative purposes. past performance does not guarantee future results. data shared from third parties is obtained from what are considered reliable sources; however, it cannot be guaranteed. any articles, daily news, analysis, and/or other information contained in the blog should not be relied upon for investment purposes. the content provided is neither an offer to sell nor purchase any security. opinions, news, research, analysis, prices, or other information contained on our blog services, or emailed to you, are provided as general market commentary. stack does not warrant that the information is accurate, reliable or complete. any third-party information provided does not reflect the views of stack. stack shall not be liable for any losses arising directly or indirectly from misuse of information. each decision as to whether a self-directed investment is appropriate or proper is an independent decision by the reader. all investing is subject to risk, including the possible loss of the money invested.

it’s time to grow your wealth

3 users1+ Lac investors are growing their wealth with Stack.
stack mb