U.S. Government Default? AI & Socialism? Ep. #176

The guys discuss the current state of the US economy in this week's episode.  Janet Yellen has said may cause the US to default by June 1st. It is noted that the House has passed a measure to keep the government open and included $1 trillion in cuts, including rescinding 87,000 IRS agents, clawing back unspent COVID money, and ending the student loan forgiveness plan. It is suggested that the government is out of money and that the debt ceiling limit is at 31.4 trillion, with the amount of debt per person in Cleveland being displayed on a sign. 

The U.S. debt limit, which is the amount of money the government can borrow. Most Americans do not understand the debt limit and the implications of defaulting on it. The debt ceiling has been exceeded 45 times in the last 40 years, but the only time it had a cascading effect on the stock market was in 2011. The credit default swaps, which are bets on something bad happening, are currently at their highest since 2000. There is a high likelihood that the government will default on the debt limit.

What will happen to the  money stored in U.S. Treasuries if a default occurred?  In the worst-case scenario, Democrats would have to compromise and that there would be a cascade of problems.