Yesterday was the day that the U.S Treasury reached its debt ceiling, the much-debated limit for how much the nation can borrow. It's important to understand what the debt ceiling is not: It's not the point at which the government shuts down, or even runs out of money. What it means is that the Treasury Department is not legally allowed to borrow any more cash.
So what will Treasury do if it can't legally borrow money? The first step is this: There are many small, largely unnoticed things the Treasury invests in, such as issuing debt for state and local governments, that will help stave off its reaching the ceiling. Starting this week, they'll stop doing some of those things. Treasury officials estimate that such emergency measures will keep the department from exceeding its limits until early August.
One thing the Treasury department will be able to keep doing until then, oddly enough, is issuing its own debt in the form of T-bills. Why doesn't that add to our nation's debt? Because many of the Treasury auctions are simply rolling over debt that has expired, and doesn't add to the aggregate total of debt. So at least through August, you can expect to be able to invest in Treasury bills just as you always have.
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