For most of us, vicious circle in the context of debt, refers to the inability and continued need to borrow to maintain status quo.
For the government however, there is a whole new meaning to it.
Congress approves budgets each year, which the President is expected/ mandated to spend.
Here’s how the vicious circle goes:
- Congress asks Government to spend money it doesn’t have
- Government needs money to execute the budget, hence borrows
- Debt levels need to be increased, which only Congress can approve
- Congress won’t approve
Happy Debt Ceiling Politics Day ;)
PS: My guess remains that something will happen tonight, the drama will be interesting nevertheless