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