How could the 14th amendment relate to the US gov't debt ceiling crisis?
It's a disturbing development -- someone is floating the idea that the executive has the ability to issue debt without the consent of congress to measure the public's reaction. Why disturbing? Because people are using language like this: The president, moreover, can move quickly, but court cases take time. “At the point at which the economy is melting down, who cares what the Supreme Court is going to say?” Professor Balkin said. “It’s the president’s duty to save the Republic.” The implication to your personal finances is that we continue to live in interesting times, and you need to be aware of the downside risks that your investments are exposed to. If your portfolio is built around the idea that US government obligations are risk-free, you need to rethink that. Section Four of the amendment reads: The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.  In other words, if President Obama wants to, he could unilaterally invoke this provision and go ahead and get the money he needs.  Good articles describing this in some detail can be found here and here.
"The debt ceiling doesn't give the president permission to spend more money.  The debt ceiling gives the treasury permission to pay our bills.  Also, they shut down the government once, and tried to shut it down 2-3 times over the course of Obama's presidency.  So to say that everything was ""smooth"" is either forgetting what happened or choosing to ignore it." "Most of those countries had debt that was well beyond prudent levels (~70% of GDP) before the crisis, levels such that any crisis would put them over the safe limit and into trouble. The only exception was Spain whose debt levels were still marginally dangerous. Greece was off the charts, which is why they left off the graph for Greece.  Second problem. On top of the high or marginal levels of government debt, the governments implicitly or explicitly guaranteed the banks, without limiting in any effective way their levels of leverage and risk (inb4 Basel II - a lot of paper that made no difference). Protip: if someone guarantees your debt, they should be able to oversee your level of risk, but the governments didn't.  As a result these banks, and their CEOs in particular, have a bet that goes ""heads I win, tails I win (and you the taxpayer lose)"". If the loans are paid off the CEOs rake in millions. If the loans go bad the government bails them out and the CEOs and other top executives - you guessed it - rake in millions. Of course when faced with these incentives the banks will lend too much.  This is not free market capitalism, it is crony capitalism. **Bailouts of private companies are not part of unfettered free market capitalism.**  The third problem is that the same governments cannot print money like the US can because the Euro is not owned by the individual governments.   The answer to excessive levels of government debt is for governments not to borrow too much and not to take on excessive unfunded liabilities such as pensions. This probably needs to be enforced by a constitutional amendment, so it can't be easily overruled.  The answer to governments getting dragged into bailing out insolvent banks and then going under themselves, is to allow the banks to go under and to guarantee only small deposits. Let shareholders, bond holders and large (&gt;$500k) lenders to the banks to lose their money. Second, hold bank executives and shareholders liable for the bank's debts. Eg executive salaries and other remuneration need to be clawed back up to a 5 year window. Shareholders should be liable (as they used to be) for debts up to an additional 100% of the par value of the shares. I can assure you this would concentrate minds wonderfully - as it did in the old days when Wall St investment banks were partnerships with each partner liable for all the debts of the firm.  Another alternative would be for governments to enforce limits on financial risk, but unfortunately they do not have the courage to do this, nor the morality to resist ""campaign contributions"" / bribes to look the other way.  If these steps were taken the issue of the Euro currency would not be a problem. However printing money (which requires having your own currency) is a solution if it comes to that although it comes at the expense of people who have saved and invested prudently. Printing money (keeping interest rates excessively low for years on end) subsidizes borrowers - the ones who created the problem - at the expense of savers. Clearly this creates terribly perverse incentives the next time around.  Anyone who thinks this problem is a result of unfettered free market capitalism is not paying attention." &gt; The European economy was not utterly doomed before the Euro, therefore the fall of the Euro does not doom their economy.  I'm not sure how that's related at all.  Just because at some random point in time, the European economy was doing OK, doesn't mean that it will definitely be ok again in the future after a jarring multi-national currency shift.  There are tons of other factors in play.  First of all, who's going to accept drachma again?  What is it worth?  What about pesata and lira?  These currencies haven't been used in over a decade.  Who is going to value them?  Who is going to accept them?  What happens when the Greeks default?  When their pension checks start bouncing?  This is what Germany is fearing.  Who is going to buy their products when there is a major currency crisis going on? Ehm, the 2008 crisis was effectively a debt crisis. Debt levels are  higher now than in 2008 and default rates are on the rise. Furthermore the ability for monetary policy to absorb has been spent. What helped in 2008 was the high savings rate of China. Now even china is in a debt bubble.  Stocks are beyond expensive in a historical context, and the reason is, with money so cheap where else do you stand to get some return? This crash is coming... not sure when as market timing is impossible, but i would advise you to take a big crisis into account in your planning..., Like all many branches of the economy, they do cross over at points. Private stock value increases pushes up tax revenue which in turn contributes to easing of national debt. The level of economic ignorance in this thread is astounding. Well technically debt is commonly measured as a % of GDP in order to give it a sense of scale. How else would you compare US debt vs Greek debt. You can also do it as a % of assets I guess, but that's much harder to measure I think it would have the same effect as paying off a compulsive gambler's debts. Until Congress and the people who vote for them can exercise some fiscal responsibility sending more money to Washington is pointless. In fact, I'd argue that if you were a multi-trillionaire and could pay off the whole thing through a donation, we'd be back to deficits within a decade (or less). Yes, if somebody puts you in a  multi trillion dollar deficit...yeah, it may take 60+ years to pay it off.   Lets say your spouse racked up a few million in bills....that you are responsible to pay pack...how long do you think the fault will lie?  Also, don't forget to add in lost opportunity costs of not being able to do anything else but pay back bills.