default

A debt ceiling is a legal limit on the amount of debt a government can borrow. When a government reaches its debt ceiling, it can no longer borrow money to pay its bills. This can lead to a government shutdown, a default on its debt, or both.

The debt ceiling is an important tool for controlling government spending. By limiting the amount of debt a government can borrow, the debt ceiling helps to ensure that the government does not spend more money than it takes in. This can help to keep inflation under control and prevent the government from accumulating too much debt.

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US debt ceiling default occurs when the US government is unable to pay its financial obligations, such as interest on its debt or payments to government contractors, due to insufficient funds. This can happen when the government reaches its debt ceiling, which is the legal limit on the amount of debt it can borrow, and Congress does not raise or suspend the debt ceiling in time.

Defaulting on the debt ceiling would have severe consequences for the US economy and financial system. It could lead to a loss of confidence in the US government and its ability to manage its finances, which could result in higher interest rates, a decline in the value of the US dollar, and a decrease in economic growth. It could also make it more difficult for the government to borrow money in the future, which could lead to cuts in government spending or tax increases.

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