What is the Debt Ceiling and Does it Matter?

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In this video we discuss the debt ceiling. What is the debt ceiling? What is the history of the debt ceiling? How does the debt ceiling work? Does the debt ceiling work?

00:00 Introduction
00:28 What is the debt ceiling?
01:14 How does the debt ceiling work?
01:46 Does the debt ceiling work?
02:26 Is economic armageddon coming?

Some useful links to go along with this episode:

1) What is the debt ceiling?

2) Is the USA bankrupt?

Cullen Roche is the CIO of Discipline Funds, an asset management and financial advisory firm. He has managed billions of dollars in his career and helped thousands of people achieve financial independence. He is the author of the best-selling book "Pragmatic Capitalism" as well as the most widely read macroeconomic paper on the SSRN database "Understanding the Modern Monetary System".

*Disclaimer* - This is for educational purposes only and is not financial advice.
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disciplinefunds
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I think you're mostly right, but it is not completely without consequence. Treasuries that mature around the time of the debt ceiling raise tend to be avoided, which lowers liquidity in the market. This issue is especially acute with bills, and does correlate with previous market events.

johnschoolfield
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One concept I'm not fully understand is "liquidity" in the financial market. Thank you.

benitoproto
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What is debt and does it matter?

Serious q, BTW😅

Ellesar
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If the debt ceiling mattered, I certainly wouldn't put it in the hands of an overspending Congress to vote on. It's like having a wife that keeps maxing out credit cards, and while you have to pay the bills with no say in the matter.
Maybe it should matter, and the taxpayers able to vote on it. They can start cutting pork barrel projects like gender studies in Pakistan. I am not sure that isn't paying themselves, or some group for nefarious personal reasons.

MichaelSHartman
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