Several days ago, Treasury secretary Janet Yellen warned that the U.S. was at risk of running out of money by the middle of October. By doing so, the country would default on its debt for the first time in history.
There’s a surprisingly easy way to solve that problem: raise the debt ceiling. For the unacquainted, the debt ceiling is an arbitrary limit imposed by Congress to restrict federal debt. For nearly all of American history, Congress used the debt ceiling to reduce debt. Ironically, it has done a very poor job of doing so (especially in the last four decades). tl;dr: debt go ๐.
In today’s climate, the reasons for raising are more dire than they’ve ever been. Most economists and politicos (including the folks at the Treasury) agree that not raising the debt limit could have severe repercussions on the dollar, the global economy, and the U.S. public.
Certainly lawmakers will come around, right? Well, prediction market bettors aren’t too sure: PredictIt bettors have assessed that there is only a 33% chance that the debt limit will be raised by Oct. 15. ๐ฌ๐ฌ
Considering Oct. 15 isย ridiculously close to Yellen’s foretold Debtย D-Day, these odds would suggest that bettors aren’t bullish on a debt limit raise happening in time. The fallout could be exceptional, leaving millions of families without their child tax credits and social security checks.ย
But for markets, a default will certainly mean a credit downgrade… increased borrowing costs… some stock shockwaves… and potentially a swift boost to crypto markets which reject central banking theory.ย
It’s untold what will happen at this point, but we have our eyes on this elephant in the room. ๐