Source: Hong Kong 01

Author: Lu Yi

Janet L. Yellen, US Treasury Secretary, suddenly warned: On June 1, the US government will have debt defaults!This will be the first debt default in American history.On May 10, the US President Biden also delivered a speech on the Republican debt limit the bill.Karine Jean-Pierre also said: The United States is not a country where the account is not repaid. We have never owed the bill ...

These politicians really dare to say!It is a "big drama" about the debt limit in a few years. In 2019, the Trump administration had not been discussed due to the debt limit problem. The US government stopped for 22 days.Or do not pay for no paid work.According to data from the US Finance, since 1960, the United States has suspended or raised its debt limit 80 times.

There are less than 20 days left from Yellen's description on June 1, and Americans are "playing the timid ghost game".The Republican and Democratic Yoga fiercely intimidated each other to see who can bear the consequences of debt defaults.

"Gully"

In January of this year, Yellen Trusted Congress: The scale of US federal government debt touched the legal debt limit of US $ 3.1.4 trillion ($ 4.2 billion) approved by the Congress in September 2021.To avoid government debt defaults.The popular understanding of the sovereign government's debt defaults is that the state's finance office is not available. If the debt is not increased, it will cause the government to stop.According to US behavior habits, when facing the risk of debt defaults, they usually increase the upper limit of debt, but only require the approval of the US Congress.

Generally, the differences between the two parties to increase the upper limit of debt are mainly reflected in two aspects. One is the condition for increasing the debt limit, and the other is to increase the amount of debt limit.

Democratic Yellen representative Biden proposed a plan, that is, the upper limit of the US debt was raised to $ 51 trillion. The reason is that since the beginning of Bush's anti -terrorism policy, the number of presidents in the United States will add nearly $ 10 trillion in Treasury bonds.EssenceSpeaker of the House of Representatives, Republican Kevin McCarthy, on behalf of the Republican Party, came up with its own plan, the 2023 restriction, savings and growth bill of US $ 1.5 trillion in debt limit plan, which passed on April 26.US Treasury bonds increased to the upper limit of $ 32.9 trillion.

But the premise is that the Bayeng government must control the expenditure at $ 4.5 trillion.In addition, the administrative department may promise to reduce expenses before increasing the upper limit.McCarthy has repeatedly stated that if Biden does not control government expenditure, it is necessary to prevent the upper limit of government loans.The problem is that the areas led by the Republican Party demanded that government expenses include medical care, science, education, climate, energy, etc., which happens to be exempted from student loan debt plans, medical subsidies, tax reduction and climate changes with the Bayeng government.Policies and other conflicts, because the Bayeng government must increase government expenditure to achieve its goals.

Not to mention the gap between the upper limit of the debt of US $ 3.2.29 trillion to $ 51 trillion, which can be seen that the difference between the two is huge.

Who is "timid"?

On May 9th, Biden and Macao and other two -party members held a meeting to negotiate a new round of negotiation on debt defaults, and the two sides still failed to reach an agreement.This is an inevitable result.So, how will the negotiations of this round of debt be ended in the end?

First of all, from the perspective of data, according to the US Department of Finance, the United States has suspended or raised its debt limit 80 times since 1960, most of which are raised.Since 2010, the two serious debt limit crisis occurred under the situation of the Democratic Party and split the government government in 2011 and 2013 when Obama was in power.

The current political cycle of debt limit in 2011 is relatively similar.During the 2008 Obama administration, Congress and President were under the governance of the Democratic Party. After the 2010 midterm elections, the Democratic Party lost the House of Representatives. The Republican Party began to restrict the Obama government's expenditure and related stimulating plans after obtaining the House of Representatives.Until 2011, the United States touched the debt limit again on May 16th. The two parties did not give up the budget reduction and the adjustment of the debt upper limit, which was more similar to the current situation.

The current economic environment is more similar to the performance after the 2008 financial crisis impact.After the financial crisis and crown disease epidemic, the United States has promoted large -scale fiscal stimulus policies, both of which have led to a short -term increase in the federal fiscal deficit rate and increased the pressure on debt payment in the United States.From 2011-2013, US debts have touched the upper limit of debt. Correspondingly, since the great stimulus of crown disease in 2020, the three debt limits in August, December and 23rd in 2021, and January 23 were reached.

The difference is that compared to the government closing crisis caused by the debt limit from 2011 to 2013, in the tightening cycle of liquidity in the United States, the debt limit crisis will further exacerbate economic recession expectations.The sharp interest rate of the Federal Reserve, which relieves the "high fever" of inflation, has also threatened economic growth. It has superimposed the recent Silicon Valley banks, signature banks, the United States First Communist and Bank crisis to make the world's confidence in US debt.Discounts have further accelerated the speed of selling US debt around the world.

McCarthy finally has a great compromise.Two aspects: First, the extremely weak leading advantages of the Republican Party and the unprecedented split within the party have greatly weakened the foundation of McCarthy.Second, according to McCarthy's past, he was ruthless, and he had little performance.Moreover, Yelun is constantly "scared" -if the upper limit of US debt is unable to increase the debt defaults, it will have a "disaster" on the United States and the global economy.

Yellen is naturally true, but the presidential election in 2024 is about to open. If McCarthy is "relaxed" at this time, it will cause the Democratic Party to have sufficient funds to operate. The probability of re -election in 2024 will also increase significantly.

The impact on the dollar cannot be underestimated

From the results of the debt limit process, in the 2011 debt limit crisis, the two parties reached an agreement a few hours before the so-called X-Date on August 2, 2011. Although the United States did not really break the contract, itAs the financial cliff near the market caused panic, on August 5, 2011, S & Per decided to reduce the US sovereign rating from AAA to AA+for the first time.

In 2011, the United States increased its debt limit to US $ 1.6.39 trillion after the debt limit was touched. On December 31, 2012, the United States once again touched the debt limit.In February 2013, Obama signed a budget without a budget and no expenditure bill. For the first time, it was announced that it would not directly increase the debt limit. Instead, the time limit was set to suspend the suspension of the debt limit, and the debt limit was postponed to May 18, 2013.After the debt limit came into effect on May 19, the debt limit fell into a deadlock. Until October 16, the X-Date announced the suspension of the debt limit the day before, which also led to the October 15th international rating of the Fitch International.Negative observation rating. "

Similar situations may happen.

Of course, in fact, even if you raise the upper limit of debt again, it will soon spend and bottom.Earlier, the upper limit of debt was increased to $ 3.1.1 trillion. As a result, the fiscal budget last year was all spent, and there was no remaining food.And this "law" has never changed.

The essence of the debt limit is the "farce" of the two parties in the United States. The two parties are constantly testing the bottom line of the other party and capturing more political interests.The degree of impact on the market may be greater than 2011 and 2013.In addition, once the problem of debt limit is resolved, the United States will use a large debt to fill the Ministry of Finance, especially in the Fed's interest rate hikes and shrinkage cycle, the impact of this debt limit crisis on the liquidity of the US dollar cannot be underestimated.

On the one hand, the subsequent impact of the US debt storm is worthy of high attention. Global funds will change in the direction of investment. To a certain extent, the willingness to purchase US debt in the market will indirectly promote high commodities, precious metals and oilPrice, this will undoubtedly promote global inflation for a long time.On the other hand, in the case of the Federal Reserve's interest rate hike response to inflation, the US banking industry will continue to "lose blood", and the risk of crisis in the banking industry is far from disappearing.In fact, after the outbreak of the US banking crisis, the US credit demand in the first quarter encountered a rare plunge, the lowest level since 2009, which may mean that the United States is accelerating the decline.It is necessary to pay close attention to the impact of all macro micro -micro -micro -US dollars. The value of the US dollar is the last fortress. However, the government's arrogance is just consumption.