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TL;DR
The US authorities, very like the Lannister household, is extensively identified to at all times pay its money owed. However proper now, the US has money owed coming due that it will possibly’t afford to repay.
One answer? Take out extra debt, to pay the previous debt. (The identical approach your chaotic finest good friend retains taking out new bank cards to repay their previous ones).
To usher in the money wanted to service this new debt, the federal government would most probably concern new bonds.
These bonds will doubtless take up cash that may have beforehand been put into cryptocurrencies, like Bitcoin.
However hey, a dip in crypto costs to make sure continued religion within the US monetary system? We’ll take that commerce.
Full Story
Okay, so that you may be listening to a bunch of chatter concerning the US debt ceiling, the potential issuance of Authorities Bonds and its impact on crypto.
Here is what all of it means in plain language:
The US authorities, very like the Lannister household, is extensively identified to at all times pay its money owed.
However proper now, the US has money owed coming due that it will possibly’t afford to repay.
If it had been to default, it might have huge implications – as a result of up till now, the US has at all times been seen as the worldwide monetary tremendous energy.
(Defaulting on money owed = a lack of religion within the US monetary system).
One answer? Take out extra debt, to pay the previous debt.
(The identical approach your chaotic finest good friend retains taking out new bank cards to repay their previous ones).
The one factor standing in the way in which of this strategy is the debt ceiling.
Identical to the remainder of us, the US has a restrict of how a lot its allowed to borrow. The one distinction is, the US authorities controls its personal borrowing restrict.
That means, if the US needs extra money, it will possibly simply increase its restrict (which is at present sitting at – look ahead to it – $31.4 Trillion. With a T.)
Here is how this transfer might affect the crypto market:
To usher in the money wanted to service this new debt, the federal government would most probably concern new bonds.
Bonds are sort of like authorities I-Owe-You’s, you purchase a bond → the gov. will get the money, and pays you curiosity over time.
Traders like authorities bonds as a result of they’re seen as tremendous protected bets.
You place your cash in, you earn curiosity, and get your preliminary funding again on the finish of all of it.
Bada-bing-bada-boom.
The concern for the crypto market is that these bonds might be too tantalizing for the broader market, and among the cash that may have been put into cryptocurrencies, like Bitcoin, will as an alternative go to bonds.
However hey, a dip in crypto costs to make sure continued religion within the US monetary system?
We’ll take that commerce.
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