As more news appear in regards to the US's debt ceiling issue, I got bearish and wondered if there might be another crisis looming near. Can Uncle Sam really pays its debt?
How can the US pay its debt?
There are three ways that the government can fund its debt. Increasing tax, borrowing money or to print more money. Since the Federal Reserve has declared that they are going to stop printing money in June, which also signifies the end of Quantitative Easing 2011 (WSJ 2010), this leaves us with the former two choices, increasing in tax or to borrow money. Earlier this week, the US treasury secretary Tim Geithner once again urged the congress to extend the debt ceiling so that the government would be able to perform their daily operation and at the same time, have more time to plan a proper budget (CNN 2011). So what happens ......
As more news appear in regards to the US's debt ceiling issue, I got bearish and wondered if there might be another crisis looming near. Can Uncle Sam really pays its debt?
How can the US pay its debt?
There are three ways that the government can fund its debt. Increasing tax, borrowing money or to print more money. Since the Federal Reserve has declared that they are going to stop printing money in June, which also signifies the end of Quantitative Easing 2011 (WSJ 2010), this leaves us with the former two choices, increasing in tax or to borrow money. Earlier this week, the US treasury secretary Tim Geithner once again urged the congress to extend the debt ceiling so that the government would be able to perform their daily operation and at the same time, have more time to plan a proper budget (CNN 2011). So what happens ......
