The US federal debt limit is about to be reached today at a dollar amount of $14.3 trillion and the debt ceiling needs to be raised or the US will face defaulting on its bonds
Think about this argument in terms of your own budget and your ability to raise cash in the event you have not earned what you thought you would, your household expenses have increased, you have hit the limit on your credit cards, your home equity line is finished and your savings have been depleted.
Do you have the option of heading into your basement, flip on the printing press and just create money where none existed before? Of course not but the federal government can do just that which is where the debate will start!
The US Treasury will find a way to avoid a United States default through the end of July. That’s the good news. The bad news is that the Congressneeds to find a way to agree on raising the debt ceiling by then or the US would face defaulting on treasury debt.
This debt limit issue will be hotly debated, contentious and a part of the 2012 elections but in the meantime our personal financial well-being hangs in the balance.
One side of the argument wants to simply raise the debt limit as has been done in the past while the other side wants to mandate serious spending cuts before and increase is implemented.
While no one knows what the actual impact of a US debt default would be, the fight over raising the debt ceiling will be long and contentious. Of that fact there is no doubt!
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.