Potential Macroeconomic Effect of Debt Ceiling Brinksmanship

by Sabrina I. Pacifici on October 3, 2013

U.S. Department of the Treasury: The Potential Macroeconomic Effect of Debt Ceiling Brinksmanship. October 3, 2013

“The United States has never defaulted on its obligations, and the U S. dollar and Treasury securities are at the center of the international financial system. A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse.”

  • See also The Potential Pain of the Debt Ceiling Impasse – “There is a great deal of concern about the ongoing debt ceiling negotiations in Washington with much talk in the mainstream media about hitting the $16.699 trillion ceiling some time in mid-October.  What is getting little coverage right now is the fact that the debt limit was actually hit – back in March 2013, just after the House passed H.R. 325, a measure that was taken to suspend the debt limit.”

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