US TREASURY SECRETARY YELLEN: THE TREASURY EXPECTS TO REACH NEW LIMIT BETWEEN JANUARY 14 AND JANUARY 23, AT WHICH TIME IT WILL BE NECESSARY FOR TREASURY TO START TAKING EXTRAORDINARY MEASURES.
— FinancialJuice (@financialjuice) December 27, 2024
As Treasury Secretary Janet Yellen recently warned, the U.S. Treasury expects to hit its debt ceiling sometime between January 14 and January 23. This means the government will no longer be able to borrow more money unless Congress acts to raise or suspend the limit. If that doesn’t happen, the Treasury will need to start using what’s called “extraordinary measures” to keep things running—temporary fixes like pausing investments in certain government accounts.
This situation isn’t new, but it’s still incredibly serious. If Congress fails to raise the debt ceiling, we risk a default—a word no one wants to hear when it comes to a country’s finances. The last time this happened was back in 2011, when political gridlock caused a major stir. The U.S. credit rating was downgraded for the first time in history, causing panic in financial markets. A repeat of that would be disastrous, leading to higher borrowing costs and a lot of market instability.
We’re now heading into another potential crisis, with the Treasury scrambling to keep things afloat until Congress steps in. But here’s the catch: the extraordinary measures are just temporary. They won’t solve the debt ceiling problem—they’ll just buy us a little more time. So, whether or not we’ll see another showdown in Washington remains to be seen. But as always, the clock is ticking, and the stakes couldn’t be higher.