| Sometimes your kids pose questions that are impossible to answer. My son recently had a doozy for me... "Why," he asked, "does the debt ceiling exist?" He's a junior in high school and is taking a course on macroeconomics. This month they're studying monetary and fiscal policy - interest rates, the Federal Reserve, taxation and government spending, etc. - and how they can impact the economy. He's had a bunch of questions for me about all of these topics, which is wonderful because I love talking about this stuff and it gives us yet another way to interact. But he stumped me on the debt ceiling. I've been monitoring this limit on U.S. borrowing for over a decade for various jobs, and it still doesn't make any sense to me. But apparently it doesn't make sense to a lot of people... When I was a consultant to hedge funds, I would make the rounds of European financial capitals - London, Madrid, Frankfurt, Geneva - to explain to them the intricacies and nuances of the Fed, the White House and the Treasury Department, as well as the politics of important committees on Capitol Hill. In August 2011, I was in Frankfurt talking to hedge funds when the Obama administration and Congressional Republicans couldn't agree to raise the limit on U.S. borrowing. The Treasury got perilously close to default. And I would get the same question over and over: If Congress approved the spending and won't raise taxes to pay for it, why would it then block the Treasury from borrowing the funds necessary to pay its bills? | 
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