It seems there is no ceiling with regard to how ridiculous the current US leadership can be.
At least there’s a ceiling to how much they can spend…right?
Think again. Here’s some fun facts about the US Debt Ceiling:
- In 1917, the first debt ceiling was set at $11.5 billion
- The current debt ceiling is $14,294,000,000,000 ($14.294 trillion)
- It has been raised 74 times since March 1962, and approximately 100 times since inception.
- Since 2001, the ceiling has been raised 10 times! That averages out to once a year for the past 10 years.
- US accrued debt hit the $14.294 limit on May 16th, but “creative accounting” has allowed the powers that be to continue borrowing until August 2nd before the ceiling is officially breached.
So what’s the point of a debt ceiling if it’s just going to get raised?
I personally think it’s good that the ceiling keeps everyone aware of the debt situation and initiates debates. That said, at times the process of getting the ceiling raised is such a circus act that it seems it may be better to do away with the limit altogether. After all, what good is a limit if it is always raised?
For the most part, the market is ignoring this whole debt ceiling fiasco. While the media is hyping up the debt ceiling situation the market is paying attention to earnings, which are stellar (approx 82% of S&P have beat). There is not much fear priced in, and based on the price action the market has no doubt that a deal will be made and the ceiling will be raised. After all, you didn’t really think the most influential/powerful country on earth would default did you?