What Happens if the U.S. Debt Ceiling Is Hit? | WSJ

Congress and the White House have to — yet, again — agree to raise the debt ceiling before the default deadline of June 1, 2023. While both parties disagree on conditions to raising it, they both agree that a default can’t happen.

Why? Because U.S. debt has become the center of gravity for the economy. Bonds issued by the Treasury are considered the safest investment and therefore the “benchmark” for so many pieces of the financial system. A default would throw the U.S. into a recession, according to Moody’s and other economists.

WSJ explains why bonds have become central to the U.S. economy and how a potential default would affect you.

Chapters:
0:00 The debt ceiling debate
1:12 How the U.S. takes out debt
2:26 Why Treasury bonds are the benchmark for investments
3:33 Two default scenarios

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