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Cake day: July 5th, 2023

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  • Adding further onto your point emphasizing why this will be severe: Borrowing will become more expensive, and we can’t just stop spending to stop borrowing. Much of the current debt is in short term positions that regularly get re-issued. The cost of issuing new short term debts just to replace the current ones coming due will increase even if spending stays the same (or decreases).

    And of course, there’s a huge impact to the dollar’s value internationally if major financial markets shift away from holding US debt. You know the trade deficit Republicans like to rage about … Yeah, it’ll get a lot worse when fewer people want to hold US dollars for the purpose of investing in US bonds.