Is the US Treasury running out of cash? According to the Congressional Budget Office (CBO), that’s a yes, by September. This could have huge ramifications for the global financial economy.
The US government has been spending more money than it brings in for years – this has lead the Treasury to issue bonds – borrow money.
But the Treasury can issue so much debt before it touches the “debt ceiling”, a borrowing limit set by Congress. Congress has agreed to suspend that limit until March 2nd, but when that limit comes back into effect, the Treasury will no longer have the authority to borrow additional funds, IE issue new bonds.
We’ve seen this dance played in and out of Washington for the better part of the last decade, with both Democratic and Republican administrations resorting to “extraordinary measures” to keep the lights on and the water flowing in DC. But these are stopgap measures – they can’t rely on these measures to keep the lights on forever.
“The length of time that extraordinary measures can last is subject to considerable uncertainty,” Jonathan Blum, a deputy assistant treasury secretary, wrote in a recent letter to Rep. Richard E. Neal (D-Mass.). “Given this uncertainty, Treasury respectfully urges Congress to act as soon as possible to suspend or increase the statutory debt limit and protect the full faith and credit of the United States.”
The Bipartisan CBO report is a widely respected barometer as to when to expect the trouble that is being foretold. The Trump administration has not given its estimated date as to when the Treasury will run out of money.
“The Treasury will probably run out of cash near the end of this fiscal year or early in the next one,” CBO wrote. The federal government’s fiscal year ends Sept. 30. “If that occurred, the government would be unable to pay its obligations fully, and it would delay making payments for its activities, default on its debt obligations, or both.”
Congress has always voted to raise the debt ceiling in the past. But some Republicans threatened not to do so in 2011 in a tit-for-tat with former President Barack Obama over government spending. The threat of not raising the debt ceiling by republicans caused panic and resulted in Standard & Poor’s to downgrade the credit rating of the US – the first instance of it happening in the history of the S&P.
Jerome H. Powell, the current Federal Reserve Chairman, was asked about what could potentially happen to markets if Congress does not vote to raise the debt ceiling.
“It’s beyond even considering that the United States would not honor all of its obligations and pay them when due,” Powell said. “It is just something that can’t even be considered.”
Powell said merely bumping up against the debt limit creates “a lot of uncertainty” and serves as a “distraction from what is otherwise a pretty good economy.
The idea of scrapping the Debt Ceiling ya gained traction amongst economists and policy makers on both sides. The debt ceiling was meant to be a deterrent against outlandish government spending, but in reality, Congress passes budgets that spend more than they receive. Many more want to eliminate the debt ceiling because it causes confusion for the average American – most believe raising the debt ceiling means more spending when in reality, raising the debt ceiling is meant to satisfy monies owed by the US government that’s already been spent.
As of writing this story, the US government currently owes more than $22 trillion dollars.
What does this mean for cryptocurrency? Well. A lot. As it stands now, Republicans and Democrats both want to keep the government responsible for spending. With both parties wanting to claim the title of the party of Fiscal Responsibility, blockchain can be the answer that they’re looking for.
With blockchain, we can keep track of where our tax dollars go. We can keep track of it because the blockchain, granted it being decentralized and not a centralized blockchain like Facebook’s will most likely be, is immutable, tamperproof, and is a public ledger.
If our government needs to raise the amount of debt it carries to, say, $25 trillion dollars, shouldn’t the public know exactly how much of each tax dollar is going where and when? It’s easy to not trust the government because government has proven itself to be untrustworthy day in and day out – blockchain, especially when it comes to fiscal responsibility, can be the unbiased record that helps you and I, the electorate, keep politicians in check, and bring power back to the people.
Blockchain technology will transform this country and the world. It’s why we’re firm believers in this technology! It was designed to bring liberation and clarity to the masses, to bring power back to the everyday people who will eventually use it – and this is just one way we can start to keep Governments like the United States responsible. If we don’t like how our politicians are lying to us, no longer able to hide behind false corporations and fake promises, we can fire them in the next election, and through blockchain, make sure that the next representative isn’t a paid puppet from a conglomerate hiding behind PACS.
What do you think? We firmly believe cryptocurrency and blockchain will transform global economies. Have you considered joining us through our pro group? Let us know what you think on our Facebook Page!