US Debt Ceiling - The Debt Ponzi Lives On

[evgen]

Salam Alaikum,

Some of you may have seen talks in the news about the debt ceiling so I thought it would be interesting to explain what's going on and to help you understand how the system is a joke.

What's this debt ceiling everyone is worried about?

Let me explain why it's nonsense and how politicians keep taking you for a spin.

The system's a joke but every so often they'll keep you on your toes. Like a Christopher Nolan movie - but a sh*t version.

Think of the debt ceiling as the limit on a credit card. This is the max amount the US govt can borrow which is set by Congress. The current limit is $31.4trn.

Congress is made up of both Republicans/Democrats so some concessions will need to be made.

The US has reached the debt ceiling many times before. And every time, at the very end, the ceiling is raised.

Politicians will tussle until each party gets what they want. A party that controls congress will happily blackmail the other. But that's just politics...

Everyone's "panicking" because the US has bills to pay.

The govt has a ton of debt that needs to be paid back. But they'll never use cash to pay them off. Hello no. They just borrow more to pay off the old debt.

That's why the debt ceiling has to be raised. Smells a bit like a ponzi...

Markets are in a frenzy because many investors hold US govt debt.

If debt ceiling isn't raised:

- govt can't borrow more- govt can't pay back old debtholders- govt defaults on debt

If govt defaults then the world is screwed. US debt is considered the safest asset.

But that won't happen.

The whole financial system is underpinned by US debt, so it won't get to that stage.

They'll make you think it will.

Best case: they'll agree to a deal and raise the ceiling.

Worst case: they'll just extend the deadline until an agreement is made.

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If you enjoyed, please give me a follow as I plan to share more. I'm on here, on twitter @ secmuslimbanker and I will be launching my brand new website posting long articles on islamic finance and the financial market from a muslim perspective.

https://preview.redd.it/07nhn4ve312...bp&s=9aaf59deeb628cf5a6f10553c1c13d8a20bbcc3a

 

[balhu]

@evgen Nice insight. If you have $1 million right now what will you do with it?
1. Buy metal (gold/silver/etc)
2. Buy real estate
3. Buy crypto
4. Keep cash in the bank
5. Buy other currency
6. Other ideas?

 

[evgen]

@balhu Good question. One important constraint we have to take into account is time horizon (I.e. how long do you want to be invested for?).

Let’s assume that this is for someone who’s 35.

I would do the following:

• Keep 25% in cash in USD (because a lot of investments are overvalued and I would want to keep buying power to purchase stocks later on). I say USD because I think the markets and the economy globally will get worse and in that scenario USD strengthens vs the rest of the world.

Might seem paradoxical relative to the above post but USD reigns supreme and will continue for years to come.

• 30% in real estate (either buy a place outright that is offering good yield - using an Islamic mortgage if possible, if not buy a small place in cash, or buy a shariah-compliant REIT-like investment)
• 10% in Bitcoin (it’s high but this is my personal conviction)
• 20% in stocks (either a halal ETF or I would select a few companies in sectors I like - gold miners, oil and gas producers, uranium miners, copper miners as well as defensive business or ones that have a strong moat like ASML). In this I wouldn’t even deploy at once but slowly over time over the next 6 months as I think we’re in for a ride.
• 10% in physical gold
• 5% in alternative investments such as angel investing/VC investing or crowdfunding

 

[princesst1]

@evgen

Worst case: they'll just extend the deadline until an agreement is made.

No that not worst case scenario. People who has agendas shouldn't comment on matters they do not fully understand.

The worst case scenario not agreement so the treasury will stop paying bills despite having some or most of the money to do so.

https://www.npr.org/2023/05/23/1177...for-the-worst-if-the-debt-ceiling-isnt-raised

That means no social security, no disability payments, no payments for government programs like school lunches,etc.

They 69 miliion who depend on their social security, my mother is one of them. I used to be homeless and I know plenty of people on the street who's only income is SS or SSI.

This is not some minor matter. People like you who live in bubble do not fully understand how actions affect other people nor will deal with the consequences of those actions.

oh they will kick the can down the road, nothing to worry about, mov eon

No this a serious issue affecting millions of people

 

[evgen]

@princesst1 Well if you really believe that then that’s you. My whole point is that people shouldn’t worry about this fear mongering. It’s not the first time this happens.

Im just stating what is a practical worst case. I’ve been in the markets long enough to know this and if you look at how assets are trading you realise that financial markets are not buying into this scare.

Also how do I have an agenda? This is the second time you attack me lol. Why the hate brother. Let’s talk.

 

[princesst1]

@evgen You do have an agenda... to promote yourself as some kind of expert yet your comments betray you lack of knowledge.

As with this comment you totally dismissed the subtext and context of my comment. Again:

This is not some minor matter. People like you who live in bubble do not fully understand how actions affect other people nor will deal with the consequences of those actions.

No this a serious issue affecting millions of people

Your comment talks about stock market, a clear demonstration of your tone deafness and lack of understanding reality.

If there is no agreement can you say for certain my mother and the 69 million on social security they will get their SS or SSI check July 1st?

Again you live a bubble and do not actions have consequences spewing non sense, don't worry, nothing to see, move on subtext dismisses the reality that millions are affected and will be affected by this matter.

I’ve been in the markets long enough to know this and if you look at how assets are trading you realise that financial markets are not buying into this scare.

If you been in the markets for as long as you claim you will know there is confluence of events happening. For example retailer Kohls was has been losing money since the pandemic reported a profit for last quarter but how?

Kohl’s margins improved in the quarter, as costs of freight and online shipping costs dropped and the company got more strategic about markdowns.

https://www.cnbc.com/2023/05/24/kohls-kss-earnings-q12023.html

An one time event produced an one time profit. Because the profit the stock jumped.

There many examples of this in the market. You take that as "proof" of " financial markets are not buying into this scare" is subjective non sense. Time has not ran out yet thus the markets are not reacting, they on continuing on until there is definitive proof of what will occur.

Today is Friday June 1 st is next Thursday.

 

[evgen]

@princesst1 Thank your for the kind words brother.

Always great to have a proper discourse focused on dissecting ideas and not ridiculing the person behind such ideas.

 

[admiradea]

@princesst1 To be frank it sounds like you are coming at this from an emotional perspective and not an objective one and that is understandable given your mother is on social security and that stands to be impacted should there be no agreement. It does appear a deal will be reached though albeit potentially a few days late.

 

[evgen]

One thing I didn’t mention is that this will most likely lead to lower govt spending as a result of increasing the debt ceiling but that’s another discussion which I agree will affect many people.

 

[xiangoth1334]

@princesst1 People who are counting on ssi - disability and other funding is counting on normal people. To wake up every fucking day and go to work to fund their bullshit. It’s out of my pocket. Maybe it’s best to let them sink. That’s the way the world works right. The weak go down and the strong go up. It’s how it should be.

 

[princesst1]

@xiangoth1334 You're are full hate and spite you fail to realize people on disability are disable can not work.

What kind of human thinks that societu should let these people starve and die?

Shame on you!

Also you fail to understand economics. If you have 14 MILLION people each month not spending money what will be result for the economy?

https://apps.npr.org/unfit-for-work/

 

[xiangoth1334]

@princesst1 A lot of people abuse a system that’s why no one wants to work. People are showing their kids (who I feed) to be lazy fucks. Hopefully some make it out.

If you need it good for you. But I need to not spend 10 $ a gallon on fuel. Or 5 $ for milk and eggs FOR MY OWN PEOPLE.

Elections have consequences I guess