What history says about debt standoffs – By Neil Irwin & Courtenay Brown (Axios) / Feb 23, 2023
Every day that passes puts the United States closer to the “X Date” — the moment (estimated to be this summer) when the Treasury runs out of extraordinary measures it is using to avoid breaching the $34.1 trillion legal debt limit.
Why it matters: There are more and more signs that the possibility of protracted negotiations is causing some worry in the halls of the Fed.
Driving the news: At the Fed’s Feb. 1 policy meeting, “a number of participants stressed that a drawn-out period of negotiations to raise the federal debt limit could pose significant risks to the financial system and the broader economy,” minutes released Wednesday noted.
The big picture: In recent years, even when the country has come close to the brink as negotiations dragged on, critical markets underpinning the economy were jolted, according to new research from the Kansas City Fed.
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