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Why You Should Care About The Debt Ceiling

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Why You Should Care About The Debt Ceiling

Full Article: Why You Should Care About The Debt Ceiling

By: Kira Brecht

Brace yourself, the “debt ceiling” is back in the news. The nation’s current spending limit at $20.1 trillion is set to expire on March 15, unless Congress authorizes to expand it.

Why should gold investors care about the debt ceiling?

Remember 2011?

It was the dramatic debt ceiling standoff in 2011 that helped propel gold prices to their all-time high above $1,900 per ounce. In August 2011 that Standard & Poor’s rocked the world markets with a downgrade of the U.S. credit rating. The downgrade came in the wake of the Congressional battle over the debt ceiling, which took the country to the brink of default on its debt obligations. The historic move dealt a sharp blow to the United States’ status as an economic superpower.

A quick recap on the debt ceiling: The U.S. Constitution gave Congress the “power of the purse strings,” or the ability to control spending and borrowing. Congress is required by federal law to authorize the government to borrow funds needed to pay for current spending outlays, which currently stands at $20.1 trillion. It is noteworthy – that the debt ceiling increase is not for new spending – but for obligations already promised by the government.

 

Full Article: Why You Should Care About The Debt Ceiling

By: Kira Brecht

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