US Debt ceiling is a statutory limit imposed by the legislature on the amount government can borrow to repay the existing debt. This system was started in 1917 to limit the debt for funding world war 1.
When this limit is reached or breached government can sort for 2 options (1) delaying the debt payments (2) Increasing the debt ceiling limit. first option is not a sustainable because it will result in fall in sovereign ratings the trust in Government will decrease. The foreign investment will flew away, to avoid this situation interest will have to be increased so as to limit further borrowing, stock market will fall drastically. Gold price will shoot up and due to lack of funds many government offices will close and eventually government will shut down.
Recently Debt ceiling limit of US was reached o 15 march 2023 and goverment is currently trying to pass a resolution to increase the debt ceiling. but democrats and republicans have different opinions on it. if US government doesn’t increase the limit by june 30th then government will shut down.
