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How Trump's Government Shutdown Threat Could Affect Markets

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How Trump's Government Shutdown Threat Could Affect Markets PART 1 OF 4

The Current US Debt Ceiling in a Nutshell

Trump threatens to shut down government

US President Donald Trump on Tuesday said he was ready to shut down the government if funding for the US-Mexico border wall wasn’t approved. The US Senate returns from summer vacation on September 5. The federal spending budget and debt ceiling limit should be approved by the end of September.

The Current US Debt Ceiling in a Nutshell

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The current national debt level

The current outstanding US debt is $19.9 trillion. An average of $100,000 is added to the US debt every minute. The US government borrows these funds by issuing government bonds (SHY) (IEF) to keep its engine running, but when the debt level in the country reaches a certain threshold called the debt ceiling, the government must seek approval from the US Senate to increase the debt ceiling to continue issuing new debt to meet its short-term requirements.

Series overview

In the rest of this series, we’ll discuss the looming US debt crisis, how the US debt has ballooned so much, and the impact of a debt crisis on equities (VTI), the US dollar (UUP), and fixed income (HYG) markets.

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