The US debt ceiling has been hit; what happens next could send ripples through the economy. But is now the time to panic? Or is there still time to solve this situation? With the US economy relying so heavily on borrowing, the prospect of being unable to pay back its debts could come with a series of “catastrophic” consequences. Higher mortgage rates, a market crash, and an even harsher recession could be on the horizon. But what’s the likelihood of this happening? And are we really on the cusp of a debt debacle?

We brought on Sarah Ewall-Wice, Washington D.C.-based reporter, to help explain what is happening with the US debt limit. Sarah knows that many Americans are used to these types of debt ceiling congressional debates, but most people don’t know the impact these could have on their wealth, investments, and society as a whole. With COVID spending forcing the government to pay for even more, the debt ceiling has reached an almost unimaginable $31 trillion.

Sarah describes what would happen if the US defaulted on its debt, the programs that would be impacted the most, what republicans and democrats both want in their upcoming debates, and what everyday Americans can expect to happen over the coming months. Dave and Sarah also discuss the “trillion dollar coin” method, which could end the US’s debt quite quickly, while simultaneously acting as the most comical government bailout plan to date!

In This Episode We Cover

The US debt ceiling explained and why the government could raise the limit yet again

COVID’s effect on government debt and how spending was ramped up during 2020 

The “extraordinary measures” that the treasury is putting in place to keep the government afloat 

What happens if the US defaults on its debt and the severe consequences for investors 

Which social programs will be hit the hardest if a default happens

Market crashes, mortgage rate increases, and other effects we could be in for

The “trillion dollar coin” method and whether money-printing is the answer 

What republicans and democrats really want and why they’re fighting for it  

And So Much More!

Links from the Show

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Check the full show notes here: https://www.biggerpockets.com/blog/on-the-market-75

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