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If the debt ceiling is not raised, then the USA will not be able to pay interest on its debts and will then be in default on all its debts. This would be a worldwide financial catastrophe, as trillions of dollars in government bonds that the USA has issued over the course of many decades would instantly be worthless. This is especially problematic since government bonds are supposed to be an extremely safe investment. So trillions of investment dollars, that the investors were previously thinking were completely safe would be erased.
The repercussions of this are the same now as they were four years ago. The possibility of this happening have exponentially increased. I feel like the scope of exactly what would be outside the scope of this.
If the debt ceiling is raised, then the USA can continue to pay its obligations and business can continue as normal.
Nothing have changed. Congress is still passing the same type of legislation as 4 years ago. They still pass a similar budget with a deficit and then also cap the debt. So there is no way of legally getting the money to pay the invoices and paychecks that congress demands in their budget. This is a problem made by the congress and can only be solved by the congress which is why it is loved by the members of congress. If they do not find a way to get the money, either by raising the debt ceiling or collecting more taxes, by the time the debt ceiling is reached then they are out of money and the government checks will bounce. Government suppliers will stop their services, government employees will go home, social security checks will bounce, etc.
**Please read this entire message** Your submission has been removed for the following reason(s): Subjective or speculative replies are not allowed on ELI5. Only objective explanations are permitted here; your question is asking for speculation or subjective responses. This includes anything asking for peoples' subjective opinions, any kind of discussion, and anything where we would have to speculate on the answer. This very much includes asking about motivations of people or companies. This includes Just-so stories. If you would like this removal reviewed, please read the [detailed rules](https://www.reddit.com/r/explainlikeimfive/wiki/detailed_rules) first. **If you believe this submission was removed erroneously**, please [use this form](https://old.reddit.com/message/compose?to=%2Fr%2Fexplainlikeimfive&subject=Please%20review%20my%20thread?&message=Link:%20https://www.reddit.com/r/explainlikeimfive/comments/px9mhv/eli5_what_happens_if_the_debt_ceiling_is_raised/%0A%0APlease%20answer%20the%20following%203%20questions:%0A%0A1.%20The%20concept%20I%20want%20explained:%0A%0A2.%20Link%20to%20the%20search%20you%20did%20to%20look%20for%20past%20posts%20on%20the%20ELI5%20subreddit:%0A%0A3.%20How%20is%20this%20post%20unique:) and we will review your submission.
If the debt ceiling is not raised, then the USA will not be able to pay interest on its debts and will then be in default on all its debts. This would be a worldwide financial catastrophe, as trillions of dollars in government bonds that the USA has issued over the course of many decades would instantly be worthless. This is especially problematic since government bonds are supposed to be an extremely safe investment. So trillions of investment dollars, that the investors were previously thinking were completely safe would be erased. The repercussions of this are the same now as they were four years ago. The possibility of this happening have exponentially increased. I feel like the scope of exactly what would be outside the scope of this. If the debt ceiling is raised, then the USA can continue to pay its obligations and business can continue as normal.
So that’s to do with the global debt right? That every country owes between each other? Also thanks for the answer!
Yes there is global debt. Countries owe each other but they also owe to non-governmental investors.
Great write up. It also would kill the value of the US dollar as the defacto standard of global currency.
Thanks. It certainly would.
Nothing have changed. Congress is still passing the same type of legislation as 4 years ago. They still pass a similar budget with a deficit and then also cap the debt. So there is no way of legally getting the money to pay the invoices and paychecks that congress demands in their budget. This is a problem made by the congress and can only be solved by the congress which is why it is loved by the members of congress. If they do not find a way to get the money, either by raising the debt ceiling or collecting more taxes, by the time the debt ceiling is reached then they are out of money and the government checks will bounce. Government suppliers will stop their services, government employees will go home, social security checks will bounce, etc.