US debt ceiling

[Hend Abuenein]

I got this from LinkedIn groups:

LinkedIn Groups

• Group: Financial Risk Management Network
• Subject: A one question Poll on US debt ceiling.

Interesting new Poll in our Financial Services Regulation group.

If the US Treasury issued bonds in excess of amounts authorized by the US Congress (the "debt ceiling"), do you think those bonds would be backed by the full faith and credit of the United States?
- Yes
- No

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What do you think people?​

 

[ShaktiRathore]

hey hend late reply ,
debt ceiling as you mean from the question is the maximum debt that the US govt. can issue as authorized by the govt. But what is the meaning of phrase if debt issued exceeds the debt ceiling than is the debt backed by the full faith and credit of the US. Yes certainly if the debt is being issued by the govt. itself then the debt naturally bears the guarantee and full faith of the govt, is it possible that the debt is not backed by the faith and credit of the united states i doubt. But certainly its possible that govt. is issuing debt more than expected could see a increase in the yield of the bond due to the rise in the risk of the debt issued which already exceeds the debt ceiling. I mean its certainly possible that in times of fiscal deficits or for controlling monetary policy that US treasury can issue some amount of debt in excess of the ceiling even if its not authorized by the congress but these if at all happens would be in rare cases.

thanks