These are certainly interesting times, right? The good news is that this moment will pass, just as all the others have.
We will get beyond the cynically manufactured Debt Ceiling crisis – we’re sending along a piece by Daken Vandenburg that attempts to put it in context and help us gain some perspective.
We’re keeping the faith at DFG, and hope you will as well. Call us any time for any reason, we’re here to help!
- Allen Davis, CFP® and the DFG team
Alexander Pope, an eighteenth-century poet, once wrote “to err is human.” Mistakes, guffaws, errors, blunders, gaffes, inaccuracies…the methods of describing them are nowhere near the magnitude or quantity of their creation…but try we must. Those mistakes teach us and, if thoughtful about their introduction, also can improve us. Where humans are involved, there are, and will continue to be,
Mistakes happen wherever humans make decisions: relationships, law, medicine, astronomy, robotics, driving, cooking, the list never ends. As a particularly staggering example, the National Institute of Health, in a groundbreaking study from 1999, estimated nearly 100,000 preventable deaths occur each year because of human error.
As long-time readers of these updates will certainly be tired of hearing, decisions are probabilistic. Even above average decision-makers get decisions right far less often than we would hope.
A more recent example is the recent failure of Silicon Valley Bank (SVB), which was the 16th largest bank in the United States before its failure. Covered in our March 18 Market Update, SVB was shuttered not because its business model was flawed or its competitors more adept, or due to disruption by a more innovative bank model. Unfortunately, SVB went bankrupt because someone (finger pointing has begun) decided not to protect the bank against the risk that (very large quantities of) bonds go down. And yet, in 2022, that’s exactly what happened and, when coupled with poor communication, put Silicon Valley Bank out of business.
This brings us to another looming mistake: the possible, but unlikely, default of the U.S. Government due to our debt ceiling.
Now, if you, dear reader, are not in the habit of following the various machinations and pathways of the interactions between Congress, the U.S. Treasury, the Federal Reserve, and laws that are 200 hundred years old…fear not.
What follows is a quick synopsis of debt ceiling fundamentals, an explanation of what is occurring currently, and an analysis of possible outcomes.
Let us begin.
If you’re ready to take that next step in your financial planning, consider booking a complimentary consultation with us to see how we can help you to create an intentional plan and partner with you on your financial journey.
Stay warm during these winter months!
Allen for the team at the Davis Financial Group
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- Allen Davis
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- Lou Davis
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