With Congress arguing over Uncle Sam’s credit limit, the Fed would have to step in if debt is unpaid. Past plans included lending against delinquent Treasuries; funding a bankrupt government would break risky new political ground, GinaChon says.
Congress is once again playing a game of chicken. The $28 trillion borrowing limit went back into effect in August. If lawmakers don’t increase it soon, the government won’t be able to pay its bills starting sometime in October. Eventually, that could result in an actual debt default. The U.S. House of Representatives on Tuesday approved a measure to suspend the debt ceiling again through 2022. But that plan would require support from Senate Republicans, who have vowed to reject it.
Even if the standoff gets nowhere near a default, the central bank could still be in an awkward spot. The Treasury would have to stop paying bills, including perhaps Social Security payments to retirees. The fiscal tensions could also bring a spike in interest rates, which would make mortgages and car loans more expensive.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
U.S. Treasury yields move lower ahead of Fed decisionU.S. government debt prices were higher on Wednesday morning as investors awaited to hear from Federal Reserve Chairman Jerome Powell.
Read more »
Two Fed presidents should be fired for stock trades, groups sayInsider tells the global tech, finance, markets, media, healthcare, and strategy stories you want to know.
Read more »
Fed foresees a potential rate hike as soon as next yearNEW: The Federal Reserve signaled it may start raising its benchmark interest rate sometime next year, earlier than it envisioned three months ago and a sign that it’s concerned that high inflation pressures may persist.
Read more »
Fed Tees Up Taper and Signals Rate Rises Possible Next YearCentral bank officials are preparing to reverse pandemic stimulus programs as soon as November, while new projections showed half of 18 officials expect to raise interest rates by the end of 2022.
Read more »
Jamie Dimon warns it's possible the Fed could be forced into a sharp move next yearJamie Dimon said that if the U.S. continues to see inflation running hot over the next few months then the central bank could be forced to act quickly.
Read more »