Friendly Economic Reporter is here. Today (23rd) is the news of the US debt ceiling negotiations. That's why President Biden went to the Seven Nations Summit in Hiroshima, Japan, and then canceled his schedule and then rushed to the United States today to meet with Republican leaders. Tell us a little bit about what's going on with this debt ceiling negotiation right now.
Before I get into that, let me show you an American coin.
It's not a typical coin. It is a commemorative coin issued by the U.S. government. Made of platinum, platinum.
The face value of the commemorative coin doesn't mean much, but it's worth $50.
But in 2011, when President Obama was president, there was an idea among senior U.S. government officials to print a trillion dollar coin, and to make a 1,300 trillion won coin out of South Korean money to get out of the crisis.
President Obama acknowledged in an interview a few years later that this was really going on within the government.
Two years later, in 2013, Nobel Laureate in Economics Professor Paul Krugman wrote a column with a bit of sarcasm as he wrote, "Let's just take that trillion-dollar coin."
What's happening over and over again is the U.S. government's debt ceiling negotiations going on right now.
The U.S. government always spends far more money than it earns, including taxes.
In a country like ours, where we have to pay attention to fiscal spending all the time, the government tends to spend a lot of money at a dreamy level.
Instead, the United States has an unusual system that sets a legal limit on the amount of debt the government can pay.
To put it simply, the political world in the United States is fighting over raising the limit on how much debt can be paid.
Yes. The U.S. government has never spent money to meet the size of its debt as defined by law.
So what have you been doing? It's about changing the law.
The table you see shows how the U.S. federal debt ceiling has risen over the past 40 years.
In the early '80s, the U.S. government had $1 trillion in debt.
When the actual debt exceeds the ceiling, they raise the ceiling or push back the deadline for meeting the cap almost every year, and now the U.S. government has a ceiling of $31.4 trillion, more than $4 billion of our own money.
It's hard to guess. But this upper limit was crossed again in January.
It's time to change the law. Parliament changes the law. This is where the U.S. also comes into a political confrontation.
Because when the opposition is strong, especially when we're in the run-up to next year's presidential election, when the opposition has a majority in the House of Representatives, which is the de facto U.S. Congress, it has more negotiating power.
In this case, if the debt ceiling has to be raised, conflicts will arise.
The Republican Party, the opposition party, is now calling for a reduction in some of the key policies that the government has been pursuing, and to keep the amount of money spent at the government's discretion in next year's budget as it did last year.
June 1 is the final limit of negotiations. These reports keep coming. What happens if the U.S. government and the ruling party fail to reach a deal by this date?
June 1st is when the U.S. Treasury Secretary nailed it, saying, "If we don't negotiate by this date, we're really going to be bankrupt."
Just as ordinary people pay off their loans when they are due, the U.S. government, which has a lot of debt, keeps coming back to pay its debts here and there.
But since January, the U.S. government has exceeded the amount of debt required by law, so it can no longer pay its debt.
So I've been blocking it so far by pulling out this stone and blocking it over there.
As it stands, starting next month, the U.S. government can raise its hand to its creditors, saying, "We really don't have the money to pay it back."
It's literally a national default. Very few people think this is really going to happen.
I think the U.S. government and the opposition are using some sort of brinksmanship tactics with each other right now.
Trying to deal with this without showing that we're pushing each other ahead of next year's U.S. presidential election keeps delaying us to the point where we're getting closer.
The last time this was really close was in 2011, when we were talking about the first trillion dollar coin issue.
The U.S. Secretary of the Treasury theoretically has the authority to stamp any commemorative coin.
That's why, in 2011, he was so confrontational with the opposition that he even talked about paying off the government's debt by printing a trillion-dollar commemorative coin.
As negotiations dragged on until two days before the deadline, the U.S. credit rating was downgraded. The stock market plunged by double digits. Again, there are only a few days left.
We're going to come to an agreement somehow, but as the market gets swept up in this mood, there's a lot of uncertainty that is going to be negative for the U.S. economy right now.
If the fallout from this grows, and if we end up in a situation like 2011, our financial markets will inevitably be shaken.
[Friendly Economy] "Let's make a trillion dollar coins and pay off our debts" ?...What is the "national default D-1" negotiation?
Highlights: Today (23rd) is the news of the US debt ceiling negotiations. President Biden went to the Seven Nations Summit in Hiroshima, Japan, and then canceled his schedule and then rushed to the United States today to meet with Republican leaders. The U.S. government always spends far more money than it earns, including taxes. The government has never spent money to meet the size of its debt as defined by law. The United States has an unusual system that sets a legal limit on the amount of debt the government can pay.
A friendly economic reporter is out. Today's news is about the U.S. debt ceiling negotiations. That's why President Biden went to the Seven Nations Summit in Hiroshima, Japan, and then canceled his schedule and then rushed to the United States today to meet with Republican leaders.