America’s debt ceiling is a disaster, though fiscal rules can help
Putting strict limits on borrowing is arbitrary
IT IS ONCE again time for that most bizarre of economic spectacles, a debt-ceiling showdown in America. In the name of fiscal responsibility, the world’s biggest economy is flirting with an act of brazen irresponsibility: a sovereign default. The government has just about exhausted its current statutory debt limit of $28.5trn, after which it will struggle to honour its obligations. Janet Yellen, the treasury secretary, has warned that the government will probably run out of cash sometime next month.
This article appeared in the Finance & economics section of the print edition under the headline “Rules of engagement”
Finance & economics September 25th 2021
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