2023: Betting on a US Gov't shut down AND debt default. How to invest?

[FIREin2018]

With the small # of crazies dictating policy in the House to Reps, I see the US Gov't not only shutting down because of budget impasse (Oct 2023) but also a default on US debt (around Aug 2023) because they refuse to raise to the debt limit.

With that in mind, how to invest?

[ixtap]

Arable land and potable water.

We have no idea what investments will thrive in such a situation.

[PDXTabs]

I don't quite know the answer, but I'm interested in the discussion.

Things that you probably don't want:
1. US Government bonds
2. US dollars

You also probably don't want stock in companies that rely on the US government. Even state bonds and munis will probably get hit.

How about every dollar to your name converted to VEA?
Other options could include:
1. Mexican real estate (and residency card).
2. Colombian real estate (and residency card).
3. Chilean real estate (and residency card).
4. Paraguayan real estate (and residency card).
5. Uruguayan real estate (and residency card).
6. Portuguese real estate (and residency card).
Note: you can't do all of these due to immigration rules, but you can do more than one. Also, you are young enough that the Chilean option might be hard depending on your asset allocation.

[ChpBstrd]

There happens to be a historical parallel. The US lost its AAA credit rating in August 2011, leading to a 14% correction in the S&P500. It only took five months for markets to reach the old highs again. Bond funds were up slightly a year later.
https://www.reuters.com/article/us-usa-debt-downgrade-idUSTRE7746VF20110806

Gold (GLD) initially spiked about +18% on the news and then went into a downward trend. By 2015, GLD was 21% lower than it was prior to the US losing its credit rating.

However if we go a little further back, we can see that GLD rallied about 30% between 1/1/11 and the peak right after the loss of the credit rating, as expectations built. So for this to work, it's imperative you buy the rumor and sell the news.

Maybe GLD or long-duration call options on GLD are the trade if your expectations pan out. It looks like one of the concessions House Speaker McCarthy made to far-right conservatives in order to become Speaker was a rules change that forces the House to vote separately on raising the debt ceiling. So yes, a fight is being planned.
https://www.cbsnews.com/news/house-rules-republicans-kevin-mccarthy-speaker-concessions-conservatives/

[blue_green_sparks]

It is a pretty bad climate for the Fed to default now and be downgraded. The ironic part will be the fact that growth in the annual deficit under Trump ranks as the third-biggest increase, relative to the size of the economy, of any U.S. presidential administration. Much of that being pre-pandemic spending.

[waltworks]

Making investment decisions based on politics is usually a bad idea.

They'll cave in some way and the debt limit will get raised like always.

-W

[Michael in ABQ]

Making investment decisions based on politics is usually a bad idea.

They'll cave in some way and the debt limit will get raised like always.

-W

This. It's all posturing. The debt limit will get raised and the US won't default.

[PDXTabs]

Making investment decisions based on politics is usually a bad idea.

They'll cave in some way and the debt limit will get raised like always.

-W

This. It's all posturing. The debt limit will get raised and the US won't default.

I agree. I was just answering the question asked. I'm still ~98% VT which means I still have huge US exposure. 

[waltworks]

I just wish voters were a little more informed. Our government (the US, that is) is basically a giant insurance company with a military. If you want to meaningfully address budget deficits you have to either cut the crap out of SS/Medicare/DOD (DOD is by far the smallest of those items and even with no military at all we'd run a deficit, just in case you felt like proposing that), or you have to raise taxes. It's not complicated. Throwing a fit about the debt ceiling without proposing some real-world cuts to popular programs is just idiotic grandstanding.
 
You can get rid of all the National Endowment for foreign aid for LGBTQ+ endangered tortoises stuff you want and it's not going to make any damn difference.

-W

[ATtiny85]

I don’t even know what the potential impact of either of those may be, but I remain very confident that VTSAX will do just fine, and I will continue to dump many thousands of dollars into it throughout this year.

It’s a shame that politicians, well, just act like politicians.

[PDXTabs]

I just wish voters were a little more informed. Our government (the US, that is) is basically a giant insurance company with a military. If you want to meaningfully address budget deficits you have to either cut the crap out of SS/Medicare/DOD (DOD is by far the smallest of those items and even with no military at all we'd run a deficit, just in case you felt like proposing that), or you have to raise taxes. It's not complicated. Throwing a fit about the debt ceiling without proposing some real-world cuts to popular programs is just idiotic grandstanding.

I don't know if you noticed, but 90% of voters and politicians all across the political spectrum can't do basic math anymore. Which long term is not good for the country, but I don't expect an acute debt ceiling catastrophe.

Also, the debt ceiling is a really weird thing. The equivalent would be me signing a bunch of contracts to pay people and then refusing to because I wrote a number down on a piece of paper in my bedroom.

[YttriumNitrate]

Growing up in the DC area, I knew a lot of people who worked for the federal government. The newbies tended to panic during their first government shutdown while the seasoned pros looked for hotel rooms at vacation spots within a day's drive. The only groups that tended to get screwed over were the contractors. The smart money in the markets has seen this dog and pony show more times than they care to remember and generally ignores it. See e.g., https://www.investopedia.com/news/how-shutdowns-dont-affect-market/

It's also worth noting that a rather small percentage of government spending that is actually affected by the shutdowns.

[MustacheAndaHalf]

If you want to meaningfully address budget deficits you have to either cut the crap out of SS/Medicare/DOD (DOD is by far the smallest of those items and even with no military at all we'd run a deficit, just in case you felt like proposing that), or you have to raise taxes.

Social security is not supposed to be a budget item - it's supposed to be funded by "social security tax" shown on everyone's pay stubs.  But "supposed to" didn't stop Congress from robbing the social security fund to pay for other items.  That problem goes back much further than the new demographic problem that started ~15 years ago, where the U.S. fertility rate has fallen below replacement level.  But now both are factors in social security shortfalls.

That said, nothing will happen to the payments until it's too late.  The largest voting block in the U.S. by far is those aged 65+.  Older people vote more than younger people, making social security something no politician can mess with and stay in office.

I think that leaves social security tax, which could be a higher percentage or have a higher cutoff.  Those impact people who don't vote as much, and who should be concerned if the system will still make payments when they retire.  So while I don't see payments changing, maybe social security tax could be increased.

[MustacheAndaHalf]

In my view, active investing requires spotting a flaw in the potential future events or their probabilities.  Right now raising the debt ceiling has articles on most news websites, so I don't see where the surprise to the markets would come in.
https://www.youtube.com/watch?v=EoS52fVtVQM

The U.S. has entered a goverment shutdown before over the debt ceiling, and that could happen again.  Republicans have only a small majority in the House, which means if even a small group sides with Democrats and votes in favor of raising the debt ceiling, the bill will pass.
https://www.youtube.com/watch?v=rx5mE9XPcWw

Given the visibility of the problem now, and the uncertainty of what happens over the next 6+ months, I'd suggest you procrasticate investing in a prediction over the debt ceiling.

[jeroly]

I don't quite know the answer, but I'm interested in the discussion.

Things that you probably don't want:
1. US Government bonds
2. US dollars

Intuitively that's a sound move, but IIRC when the US lost its AAA credit rating, there was a bit of panic in the markets, which led to a flight to quality, and since there's nothing higher quality than US gov't debt (even when S&P and Moody's downgrade it), bond yields actually dropped and the US dollar firmed (thanks to the bond purchases by foreign investors).

I might look at increasing exposure to markets less linked to US investing - maybe Middle Eastern markets? Morocco? South Africa? Vietnam? ... and decrease my US exposure, if I had conviction that the described scenario is more likely to happen than the markets are already pricing in.

If you want to 'make a bet' (rather than 'investing') you might consider options and/or futures spreads with high yield US debt vs. treasuries - if there's actually a default and possibly even if there's just a shutdown, one might expect the spread (extra risk) associated with high yield to shrink.

[PDXTabs]

I don't quite know the answer, but I'm interested in the discussion.

Things that you probably don't want:
1. US Government bonds
2. US dollars

Intuitively that's a sound move, but IIRC when the US lost its AAA credit rating, there was a bit of panic in the markets, which led to a flight to quality, and since there's nothing higher quality than US gov't debt (even when S&P and Moody's downgrade it), bond yields actually dropped and the US dollar firmed (thanks to the bond purchases by foreign investors).

But they didn't default. The question was how to invest if they defaulted.

[PDXTabs]

Growing up in the DC area, I knew a lot of people who worked for the federal government. The newbies tended to panic during their first government shutdown while the seasoned pros looked for hotel rooms at vacation spots within a day's drive. The only groups that tended to get screwed over were the contractors. The smart money in the markets has seen this dog and pony show more times than they care to remember and generally ignores it. See e.g., https://www.investopedia.com/news/how-shutdowns-dont-affect-market/

But there isn't a shutdown, the budget just got passed. This is brinkmanship over the debt ceiling.

[ChpBstrd]

Check out the yield structure summarized below. Note that US treasuries, which are supposed to be the risk-free asset with the lowest expected yield, are today yielding more than AAA corporate debt, municipal debt, agency debt, and even bank CDs, depending on the duration.

There are two explanations for this inversion of the normal "risk curve":

1) Quantitative tightening has increased the supply of agency debt (e.g. mortgages) proportionally more than it has increased the supply of treasuries. However this cannot directly explain why the effect is occurring with corporate bonds, muni bonds, or bank CDs. One would have to rely on second-order effects such as competition for investment dollars or investment of CD money into agencies to stretch this explanation any further. Another problem is that the Fed is not selling anything, only letting some of the debt mature off of its books. Is the loss of federal demand enough to offset the declines we're seeing in mortgage originations?

2) Markets no longer think US treasuries are a risk-free asset, and think AAA corporate bonds, muni bonds, agency debt, and banks are now more creditworthy or less likely to default than the US government. This means the US is now more similar to the shaky governments of "developing" or debt-distressed nations, and the assumptions of asset valuation models like the CAPM no longer hold or perhaps need a different source for the risk-free rate. AAA corporate bonds and munis are now the lowest-yielding assets in the fixed income market at the one-year duration.

[PDXTabs]

2) Markets no longer think US treasuries are a risk-free asset, and think AAA corporate bonds, muni bonds, agency debt, and banks are now more creditworthy or less likely to default than the US government. This means the US is now more similar to the shaky governments of "developing" or debt-distressed nations, and the assumptions of asset valuation models like the CAPM no longer hold or perhaps need a different source for the risk-free rate. AAA corporate bonds and munis are now the lowest-yielding assets in the fixed income market at the one-year duration.

Let's pretend for a second that this is the case. What's up with the different durations? Corporates are safer for the next 10 years but after that the US government will figure their shit out? Or long term no one trusts corporations?

[ChpBstrd]

2) Markets no longer think US treasuries are a risk-free asset, and think AAA corporate bonds, muni bonds, agency debt, and banks are now more creditworthy or less likely to default than the US government. This means the US is now more similar to the shaky governments of "developing" or debt-distressed nations, and the assumptions of asset valuation models like the CAPM no longer hold or perhaps need a different source for the risk-free rate. AAA corporate bonds and munis are now the lowest-yielding assets in the fixed income market at the one-year duration.

Let's pretend for a second that this is the case. What's up with the different durations? Corporates are safer for the next 10 years but after that the US government will figure their shit out? Or long term no one trusts corporations?

Those are two good hypotheses.

Another is simply that traders and portfolio managers see a high probability of US default in the next couple of years due to political fights, and at least some of them don't want to deal with the aftermath to their funds. For example, if you were running a pension and you had to distribute the next interest payment from your portfolio of treasuries, what does it mean if that interest payment gets delayed a couple of weeks, or a couple of months? Why not dodge the drama and shift towards corporates, munis, or agencies? Similarly, if you are a trader who is shorting futures contracts against treasuries, what does it mean to your hair-thin margins if that interest payment you were counting on doesn't arrive? You'd probably choose to just sit this one out rather than take the risk.

[Sanitary Stache]

This thread is a good antidote to "This Morning" NYT newsletter which trades in cheap alarmism " If the U.S. defaults on its debts, it could shatter financial markets. Your 401(k) and other investments could follow. As the flow of money dries up, businesses could be forced to close or downsize, taking jobs with them"

[maizefolk]

I mostly* don't own bonds anyway, which means I mostly don't own US government bonds. I'd do that anyway but I figure it's about the most one can reasonably do to position for a US Federal default.

The second thing one could potentially do is to shift to a higher international investment. Foreign investment in US government debt is the main fact that keeps the value of the dollar high relative to other currencies despite our country consistently running a significant trade deficit. A default would (likely) kill foreign demand for US government debt as a safe haven investment, which would push down the value of the dollar and make foreign investments outperform in USD terms.

*Might be a little in a target date fund somewhere.

[ChpBstrd]

I think if an actual default were about to happen, the president would have two options:

1) Defy Congress and order the treasury to keep borrowing money. This could result in an attempted impeachment by Congress. The president's defense would be that Congress had passed conflicting pieces of legislation: Budgets and mandatory spending bills on the one hand constrain and require the president to spend money certain ways, and the debt ceiling on the other hand constrains and requires the president to not spend money. Another defense would be that had the president not defied Congress, people would die, the economy would crash, there would be military threats, etc. From the president's point of view, this whole argument and impeachment drama would probably last the rest of their term anyway, and would not block a re-election bid. From a legal point of view, the debt ceiling would increasingly start to look like a dead law or empty tradition. Defiance might be a good strategy for a president in Biden's position, who retains control of the Senate and thus remains unimpeachable. However the whole debacle would be a distraction from the president's agenda.

2) The other option is that the president could announce that the only way to comply with both the debt ceiling and statutory spending laws would be for the Treasury to start printing money to pay for the costs of government. Money creation by this route is different than money creation by borrowing, because the issuance of treasuries takes new cash out of circulation in the marketplace and puts it in an account where it will sit for years, whereas printing money drops cash directly into markets with no offsetting removal of cash from the markets. Thus, this move could set off a new round of inflation while stimulating the economy. #2 would be a good strategy for a president who is facing an imminent recession because the stimulus would likely help shorten the recession. It would also offer the president a convenient scapegoat if they could blame the members of the other party for not raising the debt ceiling and causing the recession and inflation. If the money-printing occurred prior to recession, a president in Biden's shoes could say - "look folks, the Republicans in the House have voted to force the government to print money as its only legal option to keep the country afloat. This will lead to inflation and a recession if it goes on too long. They are destroying the value of the dollar and American's livelihoods..." and most economists would agree with the first part. It could be an incredible political weapon to place the blame, predict the result, and then let the people see exactly the result you predicted. Plus, money printing this way is probably not illegal and impeachable like defying the debt ceiling law would be. However, the president would be wagering on the people accepting their explanation of things. The other side has a voice too, and could say the president's profligate spending caused the crisis. In reality, what the people believe probably has more to do with the size of each party's media megaphones than the actual truth. Also, if the money-printing went on for even a day before a new debt ceiling was passed, it's possible the president would end up holding the long-term political liability for any future inflation, because their opponents could point to that one day of money printing and harp on it forever. There's a risk that going the money-printing route would relieve pressure on legislators to raise the debt ceiling, and thus it never gets raised and the nation becomes stuck on the money-printing track long-term.

In the event of #1, the debt ceiling debate would essentially be resolved, perhaps for good if a court ruled that Congress implicitly sets borrowing levels when it sets budgets and tax rates and cannot create a liability for the president by passing conflicting laws. Big nothingburger. In the 2023-24 configuration of Congress, an impeachment attempt would go nowhere, but 2025 could be another story if Republicans win both sides of Congress. For this contingency alone, #2 probably looks more attractive to Biden than #1. On the other hand, a Republican-controlled Congress could impeach the president for anything (confidential documents stored in a garage for example), so why should Biden worry about this particular angle?

In the event of #2, markets could drop in 2023 like they did in 2022 as participants started to expect much higher interest rates would be needed to offset the inflationary effects of money printing. House Republicans would be under intense pressure to cave, with possibly daily beatings coming from the bully pulpit. However, chaos would be on their side as it was in previous debt ceiling debacles. People consistently (though incorrectly) blame the president for the state of the economy, so Republicans could simply wait for this tendency to take effect and use the worsening conditions to help DeSantis win amid poor economic conditions in 2024. Thus it's not clear Republicans would be incentivized to cave and pass a higher debt ceiling if the president tried to use deteriorating economic conditions as leverage against them. The story of Brer Rabbit and the briar patch comes to mind.

If #1, invest as normal. If #2, short everything.

There is also the chance the president could try out #2 for a while and then resort to #1 if it didn't work, or at least switch to #1 after the blame had been cast. This two-part dance might offer a president the best of both worlds: It would put the president in control of an economic dip blamed on House Republicans followed by a big recovery that could be attributed to the president's bold defiance of them. If a recession is imminent anyway (by all signs it is) then the timing might just work out to associate the entire recession with this Republican-led debt-ceiling issue. Then the president could take credit for the recovery by defying them and returning to borrowing.

[dividendman]

It seems to me that Congress, by implementing a debt ceiling is questioning the validity of the public debt of the United states that they (the Congress) have authorized by law.

The Congress doesn't have the power to question/deny that debt issuance due to the 14th amendment, and so the Treasury must issue the debt. I actually hope it ends up in court and they rule on it so we don't have this dumb notion of a debt ceiling.

14th amendment section 4:
"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

[PDXTabs]

It seems to me that Congress, by implementing a debt ceiling is questioning the validity of the public debt of the United states that they (the Congress) have authorized by law.

The Congress doesn't have the power to question/deny that debt issuance due to the 14th amendment, and so the Treasury must issue the debt. I actually hope it ends up in court and they rule on it so we don't have this dumb notion of a debt ceiling.

14th amendment section 4:
"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

It seems like the court could just as easily say that the founders meant bonds issued by the US government and not programs authorized by congress. Because the US government does have enough money to keep paying bonds and interest on bonds if they stop funding other normal parts of the budget.

[nereo]

Note two words in the thread subject: betting & invest.
This isn’t investing

[Heckler]

Also, the debt ceiling is a really weird thing. The equivalent would be me signing a bunch of contracts to pay people and then refusing to because I wrote a number down on a piece of paper in my bedroom.

Post of the year.  Granted it's only the 20th, but still... :)

[dividendman]

It seems to me that Congress, by implementing a debt ceiling is questioning the validity of the public debt of the United states that they (the Congress) have authorized by law.

The Congress doesn't have the power to question/deny that debt issuance due to the 14th amendment, and so the Treasury must issue the debt. I actually hope it ends up in court and they rule on it so we don't have this dumb notion of a debt ceiling.

14th amendment section 4:
"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

It seems like the court could just as easily say that the founders meant bonds issued by the US government and not programs authorized by congress. Because the US government does have enough money to keep paying bonds and interest on bonds if they stop funding other normal parts of the budget.

I agree with that. However, social security would probably be covered under "pensions".

[vand]

Also, the debt ceiling is a really weird thing. The equivalent would be me signing a bunch of contracts to pay people and then refusing to because I wrote a number down on a piece of paper in my bedroom.

Post of the year.  Granted it's only the 20th, but still... :)

Debt ceiling is a recognition of the founding principle of limited government. During gold standard it wasn't required as government couldn't spend more unless it had the gold reserves to do so or temporarily came off the gold standard.  Creation of a central bank and the adoption of fiat money now meas the only unlimited thing about government is the debt.

[dividendman]

Also, the debt ceiling is a really weird thing. The equivalent would be me signing a bunch of contracts to pay people and then refusing to because I wrote a number down on a piece of paper in my bedroom.

Post of the year.  Granted it's only the 20th, but still... :)

Debt ceiling is a recognition of the founding principle of limited government. During gold standard it wasn't required as government couldn't spend more unless it had the gold reserves to do so or temporarily came off the gold standard.  Creation of a central bank and the adoption of fiat money now meas the only unlimited thing about government is the debt.

Umm... what? The gold standard has little to do with the issuance of debt (maybe something to do with the *payment* since it's harder to inflate the debt away). The US has been issuing debt via acts of congress since at least 1790.

[maizefolk]

Debt ceiling is a recognition of the founding principle of limited government. During gold standard it wasn't required as government couldn't spend more unless it had the gold reserves to do so or temporarily came off the gold standard.  Creation of a central bank and the adoption of fiat money now meas the only unlimited thing about government is the debt.

Borrowing/debt has been allowing governments and rulers to spend more since at least the Code of Hammurabi almost 4,000 years ago. The gold standard didn't change that any more than the wheat/barley standard did in the time of Hammurabi.

[theolympians]

What does a default mean in reality? Is default just "not paying debts", the check bounced or payments stopped?? Please explain. The press reports the debt default headline like a covid death toll but I haven't heard a definition or explanation of what that means.

I think most of what happens in the USA is on auto-pilot. Money will shuffle, payments will continue to go out. IMO the debt default argument is a political ploy to garner support for more tax and spend.

If the money train stopped, and debt was defaulted on, I am thinking you would have to time the market and get out before that happens.

That said, I don't time the market and expect this manufactured political crisis to pass with increased spending and congressional authorization to continue to pay debts. I too am on auto-pilot with retirement investments.

[nereo]

What does a default mean in reality? Is default just "not paying debts", the check bounced or payments stopped?? Please explain. The press reports the debt default headline like a covid death toll but I haven't heard a definition or explanation of what that means.

It means that some debt holders would not receive all of their money. A classic governmental debt default results in bond holders seeing their notes devalued or (in some cases) becoming worthless. That’s never happened in the US but the results are likely to be monumental, as holding a US treasury bond has been viewed as being the safest place to store money (in-so-much as you get exactly what you are promised).

We talk a lot about the stock market but the us bond market is an order of magnitude larger - some $46T or so. All those bonds are what funds government spending. Worst case scenario is that institutions suddenly lose confidence in bonds as a secure place to store funds and there’s a massive cashing in. Causing them to be worth less and less. A slightly better but still very bad scenario iOS the credit rating goes down and the yield goes up, meaning it might cost the government 50% or even 100% more to do the same things, which would require massive austerity measures, lots of new taxes, or both to bridge the gap.

Defaulting would be a very bad - and very stupid - thing to allow happen

[theolympians]

What does a default mean in reality? Is default just "not paying debts", the check bounced or payments stopped?? Please explain. The press reports the debt default headline like a covid death toll but I haven't heard a definition or explanation of what that means.

It means that some debt holders would not receive all of their money. A classic governmental debt default results in bond holders seeing their notes devalued or (in some cases) becoming worthless. That’s never happened in the US but the results are likely to be monumental, as holding a US treasury bond has been viewed as being the safest place to store money (in-so-much as you get exactly what you are promised).

We talk a lot about the stock market but the us bond market is an order of magnitude larger - some $46T or so. All those bonds are what funds government spending. Worst case scenario is that institutions suddenly lose confidence in bonds as a secure place to store funds and there’s a massive cashing in. Causing them to be worth less and less. A slightly better but still very bad scenario iOS the credit rating goes down and the yield goes up, meaning it might cost the government 50% or even 100% more to do the same things, which would require massive austerity measures, lots of new taxes, or both to bridge the gap.

Defaulting would be a very bad - and very stupid - thing to allow happen

Thank you for the explanation! I can't see that happening either.

[nereo]

What does a default mean in reality? Is default just "not paying debts", the check bounced or payments stopped?? Please explain. The press reports the debt default headline like a covid death toll but I haven't heard a definition or explanation of what that means.

It means that some debt holders would not receive all of their money. A classic governmental debt default results in bond holders seeing their notes devalued or (in some cases) becoming worthless. That’s never happened in the US but the results are likely to be monumental, as holding a US treasury bond has been viewed as being the safest place to store money (in-so-much as you get exactly what you are promised).

We talk a lot about the stock market but the us bond market is an order of magnitude larger - some $46T or so. All those bonds are what funds government spending. Worst case scenario is that institutions suddenly lose confidence in bonds as a secure place to store funds and there’s a massive cashing in. Causing them to be worth less and less. A slightly better but still very bad scenario iOS the credit rating goes down and the yield goes up, meaning it might cost the government 50% or even 100% more to do the same things, which would require massive austerity measures, lots of new taxes, or both to bridge the gap.

Defaulting would be a very bad - and very stupid - thing to allow happen

Thank you for the explanation! I can't see that happening either.

Well that's just it - we are on the cliff's edge right now, and all it takes is a slim majority of legislators to decide playing roulette with the full faith and credit of the US Government is worth trying to extract whatever concessions they think they might get out of the deal.  We've already hit the debt ceiling, and we are using "extraordinary measures" to keep things afloat for a few more weeks until congress can once again raise the ceiling.

To reiterate: it only takes 1 default to seriously screw things up.

[jnw]

With the small # of crazies dictating policy in the House to Reps, I see the US Gov't not only shutting down because of budget impasse (Oct 2023) but also a default on US debt (around Aug 2023) because they refuse to raise to the debt limit.

With that in mind, how to invest?

I think I read on the news last ngiht that McCarthy, speaker of the house, said there is no chance for the US to default.  They always do these shutdown threats to scare people... by now I just ignore all the shutdown threat news.. tired of political games.

[nereo]

With the small # of crazies dictating policy in the House to Reps, I see the US Gov't not only shutting down because of budget impasse (Oct 2023) but also a default on US debt (around Aug 2023) because they refuse to raise to the debt limit.

With that in mind, how to invest?

I think I read on the news last ngiht that McCarthy, speaker of the house, said there is no chance for the US to default.  They always do these shutdown threats to scare people... by now I just ignore all the shutdown threat news.. tired of political games.

But they don’t “always do [this]”. The debt ceiling has been raised 78 times over the last 63 years. For most of those there was little to no opposition. I believe only only three of those the treasury has had to resort to “extraordinary measures” to fund the government until the limit was raised at the 11th hour.

It also is worth noting the absurdity of this statute in the first place. We are talking about debts already incurred. We literally ask the legislature to fund programs via the normal legislative process, and then ask a future congress to approve the spending which has already occurred from the previous Congress.

[scottish]

Put it all in dog money.   https://www.youtube.com/watch?v=cbI31x3FpS0