What is a Debt Ceiling?

What Is a Debt Ceiling?

The debt ceiling is the maximum amount of money that the United States can borrow cumulatively by issuing bonds. The debt ceiling was created under the Second Liberty Bond Act of 1917 and is also known as the "debt limit" or "statutory debt limit." If U.S. government national debt levels bump up against the ceiling, the Treasury Department must resort to other "extraordinary" measures to pay government obligations and expenditures until the ceiling is raised again. The debt ceiling has been raised or suspended numerous times over the years to avoid the worst-case scenario, which would be a default on U.S. government debt.


You are going to be hearing a lot about this with what's happening.


Source: Investopedia.


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