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At the beginning of June, the US raised the debt ceiling. What does this mean?🤔 In short, it means inflation will start to rise (You thought it was already rising? Just wait).
Let me explain: when the national debt grows so much that it becomes difficult to service it, there are two ways out. The first is to default. But it would be foolish to expect a country with a reserve currency to default, wouldn't it? The second option is to allow high inflation.
Watch this: More money is printed – prices go up – the GDP goes up – and then voila: the ratio of public debt to GDP goes down, everybody is happy.🙃 Instead of abruptly amputating the infected system, they chose to postpone this moment. President Biden refused to take it upon himself to do it – they moved it to the next president.
The "not on my watch" principle. Default is scarier for them than the Great Depression, let's postpone it.🤷♂️ But postponement leads to gangrene. And that doesn't change anything: rising inflation and necrosis. Or, alternatively, a tricky reset of the economy along with the political system.