Debt Ceiling And How Your G Fund Investment Will Be Impacted

Secretary of the Treasury, Janet Yellen, is asking Congress to raise the debt ceiling as soon as possible. She writes that the government could become unable to pay its bills after early June. 

“While Treasury is not currently able to provide an estimate of how long extraordinary measures will enable us to continue to pay the government’s obligations, it is unlikely that cash and extraordinary measures will be exhausted before early June,” she wrote to Congressional leaders.

Yellen added:

The two extraordinary measures Treasury anticipates implementing this month are (1) redeeming existing, and suspending new, investments off the Civil Service Retirement and Disability Fund (CSRDF) and the Postal Service Retiree Health Benefits Fund (Postal Fund), and (2) suspending reinvestment off the Government Securities Investment Fund (G Fund) of the Federal Employees Retirement System Thrift Savings Plan. Congress has expressly provided Treasury with authority to take these actions, and prior Treasury Secretaries have used these measures, which will reduce the amount of outstanding debt subject to the limit and temporarily provide additional capacity for Treasury to continue financing the operations of the federal government. After the debt limit impasse has ended, the CSRDF, Postal Fund, and G Fund will be made whole.

The current debt ceiling is going up fast. It is now about $31 trillion.

“Extraordinary Measures” Will Be Taken by Treasury

This has happened in the past on numerous occasions. It means that the federal government will begin taking “extraordinary measures” to avoid hitting the debt ceiling by stopping investment into two retirement funds for federal employees.

We do not know when the debt ceiling limit will be raised. There is little doubt, however, that it will be raised as the federal government continues to spend more money than it receives in revenue. While the free-wheeling spending has been ongoing for some time, it is always…

Read complete post here:
Source link