2023-06-04 09:07:00
In January 2023, US debt reached its legal ceiling of $31.4 trillion. The covid crisis and ambitious recovery plans have put the state purse under pressure. To raise the ceiling and borrow more, US President Joe Biden had to obtain the agreement of the House of Representatives, with a Republican majority. Long debates around the federal budget put the agreement on hold and threatened to plunge the country into a serious economic crisis, the repercussions of which would have shaken the whole world. According to the Treasury, it would no longer have been able to meet all its expenses from June. An agreement was finally reached in extremis.
Sovereign debt crises are legion in history. The 2008 financial crisis, which led to the collapse of the banking system and the bailouts of banks by governments, put public finances under severe strain. The debt of many European countries has exploded. Some, like Greece, were forced to apply heavy austerity measures, the consequences of which are still being felt today.
Despite the risks, this system remains one of the most valuable economic tools for States, perceived by many as essential to meet public expenditure. We explain it to you in this new decryption of LN24+.
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