On October 17, the U.S. will hit the debt ceiling, which means the government will no longer be able to borrow money by issuing bonds. From there, the Treasury will rapidly run out of cash as it pays its obligations.
Experts agree that this could lead to the worst-case scenario of a default.
The analysts at Credit Suisse think that the U.S. could actually start selling its gold reserves to raise cash. Here’s The Financialist’s Ashley Kindergan:
There are less obvious solutions, too. For one, the Treasury could take steps to sell the country’s gold reserves. Former Treasury Secretary Tim Geithner rejected that tack in 2011 because it would send a signal of absolute dysfunction to financial markets. But as Credit Suisse pointed out in its interest rate strategy note last week, “faced with a choice to either fail to pay someone or to liquidate gold holdings and make everyone whole, Secretary Lew could conceivably argue that it is in the best interest of the public to sell gold in order to avoid jeopardizing the United States’ credit.”
At this point, it looks like the debt ceiling may be delayed for another six weeks.