3. THE FLOW
• The Current Scenario
• How did they reach here
• Why do you need debt ceiling?
• The Criticality of the situation
• Issues if they raise and if they don’t raise
the ceiling
• Open Forum
5. Have High Debt and High Rating
Why US has been able to raise so much money
6. THE DOLLAR
• Largest industrial base and surplus of dollar
backed by Gold post 2nd world war.
•1971: The Dollar was fixed as Reserve Currency.
• 1973 oil crisis: Increase in US treasury bills
held by central governments
•As a result demand for Dollar increased in the
world arena.
9. DEBT CEILING
• Limits the amount of public debt that
can be outstanding.
• Prevents the U.S. Treasury from
issuing new debt once the limit has
been reached.
11. IMPORTANCE OF DEBIT CEILING
• Provides Congress with the strings to
control the federal purse
• A form of fiscal accountability
• Compels Congress and the President to
check their debt borrowings
35. Imports
• Imports become dearer.
• End up paying more money for same quantity
of goods purchased.
• Pace of economic growth rate slows down.
36. Exports
• Exports become cheaper.
• Importer country ends up buying same
amount of goods for a lesser price.
• As a result of increase in exports, the trade
deficit might decrease.
38. INTEREST RATES
• As a result of increase in inflation, the interest
rates will go up.
• Investor confidence will go down.
• As a result the investment in the economy will
go down.
39.
40. CAPITAL FLIGHT
• Flow of funds or investments from develop to
developing countries.
• Increases unemployment in the country.
41. CAPITAL FORMATION
• Investments and capital formation are
positively correlated.
• As investments go down rate of capital
formation goes down.
• Hence government needs money to initiate
investments and growth in the economy.
