The only other western country with a debt ceiling is Denmark.
Since their debt ceiling is so high, there are no recurring debates like we have in the U.S.
The closest that Denmark came to reaching the ceiling was 2010 - they doubled it afterward.
It appears this unnecessary nonsense only occurs in the U.S.!

I still do not understand why the debt ceiling is not unconstitutional.

Me either, but something tells me that, if it were to be challenged in court, we-the-people might end up wishing it could have been challenged before 2016. Constitutionality seems to sway in the wind sometimes. If it were deemed constitutional for some reason, things might get even worse than they are. I imagine the challenge has not occurred because of appearances (big spender) or the deadly outside chance of an unexpected result.

+1
The value penalty has been seriously real for over 45y, sc too, seems to me

Periodically, the S&P 500 becomes concentrated in its top holdings.
This is a feature, not a bug, of cap-weighted indexes.
The top 10 holdings in the S&P 500 comprised 27% of the index as of April 27, 2023.
The S&P 500 returned 8.3% YTD (through April 27).
The top 10 holdings contributed 6.0% of the return while all other holdings contributed only 2.3%.
Fundamental indexes (weighted by earnings, revenue, dividends, etc.) attempt to circumvent concentration risk.
These alternate-weighted indexes often have value and/or small-size factor tilts.
Concentration risk may be eliminated but other risks are introduced.

@rforno
"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."
I would assume the problem with the 14th amendment is it would take time.
But why can't the Treasury just announce that it will continue to print money needed?
If it did not "the debts of the United States would be questioned" and therefor the amendment authorizes it and essentially telling someone who disagrees to take them to court.
Yellen seems to want to have her cake and eat it too and at least at this point is unwilling to commit.
"All I want to say is that it's Congress' job to do this. If they fail to do it, we will have an economic and financial catastrophe that will be of our own making, and there is no action that President Biden and the U.S. Treasury can take to prevent that catastrophe," Yellen replied, later saying, "I don't want to consider emergency options."
Interesting that she does not categorically rule it out.
https://abcnews.go.com/Politics/14th-amendment-solve-debt-ceiling-crisis-good-option/story?id=99140989
43 GOP senators say they will not vote for cloture without spending cuts, claiming that raising the debt ceiling allows additional spending.
This is untrue. The Debt ceiling only allows the Treasury to pay debts that are already incurred.

NVDA is trading at a PE of 164 and a Price to sales ratio of 26!

@sma. “ when your bank closes ,,,,,,” my friend will just go his his backyard and dig up another few hundred bucks. Maybe he is not so dumb after all. At the end of the failed negotiations,,, will it be the 14th amendment, the trillion dollar coin or chaos? When the country is being held hostage by crazies it’s hard to see a solution.

@rforno
I think that applies to less than a majority of the GOP, maybe 20%. They hold influence because only 50% of people bother to vote
When your bank closes and the ATM is empty and your SS check doesn't arrive, I suspect people will notice.
The GOP will try to blame Biden, but whether this will work remains to be seen.
I still do not understand why the debt ceiling is not unconstitutional.

I agree. It's just another example of 'minority rule' disrupting the good workings of this country.
I don't think that blaming Biden for a default would stick, either. And I've read this morning that the WH hasn't removed invoking the 14th Amendment from the table ... or letting it go into the courts and let SCOTUS ultimately rule that a default is a constitutional violation -- which would also give Biden cover since it's not *him* or the D's that are making the decision here, it's the judiciary, such that it is.

I just can't imagine a prolonged default as is suggested in this post. At worst, I see a 6 month or a 1 year kick-the-can down the road. A prolonged default, to me, would be seen as an act of political terrorism or even sedation by most Americans and corporate doners. There would, I believe, be a revolt against the right-wing terrorists. Even joe-the-plumber Trump supporters would not except such pain to their pocketbook... would they?

Can't disagree with the primary statement. A short video at page top after 15 second ad.
Text and video, Mr. Buffett

One can live off dollars, one can’t on percentages. Although I understand on an abstract level removed from your actual life, it’s “all about math,” in reality in one’s life, it is not at all. This is especially so if one worked for those dollars, spent the fleeting hours of one’s life earning them.
Psychologically, it’s quite interesting. Think about if you found $100 on the street and lost it versus if you worked eight hours, gave your entire day to earning that $100 and then lost it. Would it feel the same? It’s why when losses eat into the principal you invested instead of just erasing gains you already made on top of your principal it feels worse. And losing $50,000 is always going to feel worse than $100 even if in percentage terms they’re the same, especially if that $50,000 is the equivalent to a year’s salary for many Americans and they now need to live off that $50,000 in retirement.

Covering 11 years of total returns, there is not much different in the 3 you noted. Yes, they will travel slightly different paths during a 6 month or 1 year time frame, but this is the nature of management investment choices and market valuations during such periods. The largest spread over the entire time frame is 5.3% more return for WBALX vs VWINX. As noted previous; have you a serious reason to desire changing funds ?
VWINX , INPFX , and WBALX chart from May 18, 2012 to May 5, 2023.

Hover over the date field and it shows 11/5/22, 1:15 PM.

Rummaging through old posts uncovered this from last November … Never out of date.

“Have you noticed how easy it is to tell yourself that you would be comfortable with a 10% drop in the value of your portfolio until you are seeing it losing $50,000, $100,000 or $150,000 or more . Dollars seem to have a greater impact on your tolerance.”

I decided a long time ago it’s best to view asset allocation in terms of percentages. So, theoretically, it doesn’t make any difference whether you’re managing $50,000, $500,000, or $5,000,000 when designing a portfolio and maintaining the desired allocation among different asset classes. There are some caveats: Fees tend to be higher for lesser amounts invested. And some lucrative investments may not be available for smaller sums. In that sense, dollar amounts may well influence investment decisions.
As @Bobpa correctly notes, looking at dollar sums can be gut-wrenching during falling markets as money seems to be “flying out the door”. More important, this can lead to hasty knee-jerk reactions we later regret. Another thing I noticed is that dollar sums appear to gain in importance once distributions begin. Up until then (during the working years) they’re largely “numbers” on a chart. However, once you begin spending those funds on real goods and services, your perspective changes. Suddenly you’re looking at “real” dollars in terms of what they can buy.
Post is from November 5, 2022, just a few weeks after the S&P dipped below 3,590 on October 12. That was its low for all of 2022 and lower than where it ended 2020. (Thanks @Yogibearbull for helping on the date.)

Every time I read the title of this thread I think
Break Glass!
BTW, I think any threat to SSI payments would result in playing the 14th Amendment card.

Last post @Bobpa posted on MFO was back in June 2022.
https://mutualfundobserver.com/discuss/discussion/comment/151173/#Comment_151173
In this post, he talked about his portfolio and holdings where VWINX is one of the larger allocation fund. Bobpa is in his retirement and he is looking for a replacement for some reason that he did not specify on this post. Since everyone’s situation is unique with respect to withdrawal needs., RMD, and investment horizon, the question is more on financial planning rather than a “drop-in” replacement with a different asset allocation fund.

Thanks @yogibearull for your input. So the market is expecting the worst scenario of US treasury will default by June 1st? It came close in 2011, but the psychological impact was unfortunately not long lasting enough.

With just a quick search, I haven't found much on how Social Security could be handled if the debt ceiling is reached and extraordinary measures are exhausted. Here's one page that came up, referencing a 1996 law giving temporary authority for SS to borrow without it counting against the debt ceiling.
https://www.cpapracticeadvisor.com/2023/03/02/19/77341/
My off-the-top-of-my-head thoughts are that since SS is roughly 3/4 paygo, the government should be able to make payments of at least 3/4 of "normal" amounts without any impact on debt. That in turn should cover Medicare premiums - a secondary issue that I haven't seen mentioned. (If SS does not make payments, and Medicare premiums are still due, do participants have to come up with the cash themselves?)
The 3/4 figure is based on projections that when the trust fund is depleted, payroll taxes and such will be able to fund 3/4 of amounts due.
IMHO, and without careful thought, the question seems to be whether the SSA can draw money out of its trust fund to cover the other 1/4 as it normally does. As larryB points out, there is a question of what the Treasury will do about paying off Treasury bonds as they become due. The SS trust fund is invested in Treasuries, albeit of a special nonnegotiable type. So ISTM that there's a question of whether SSA will have access to the money in the trust fund.

I know I am the voice of pessimism around here and nobody knows what the worst might bring. Nonetheless I have read several articles in the last few days that speculate that Treasury Only Money Market Funds could suffer badly post default. I wonder what might be a reasonable substitute. 1. Prime Money Market, more diversity? FDIC HYS account? FDIC insured 90 day CD’s? Checking accounts at a too big to fail Brick and Mortar Bank? Under the bed? I have a relatively affluent friend who sheepishly revealed to me that he has cash buried in his yard but I wonder if he was pulling my leg. Suggestions please.

May 5, 2023 Episode:

This week on WealthTrack...Terrence Keeley, CEO, and Chief Investment Officer of 1PointSix LLC, left BlackRock, one of the world’s largest investment managers, in July 2022 to publish his book, SUSTAINABLE: Moving Beyond ESG to Impact Investing.
In his 40-year investment career, Keeley has never advised a client to invest in ESG, and he joins us to explain why ESG investing doesn’t work and what does. This is a rare occasion for a top executive at a major investment firm to go public about a major policy difference.

Link to Podcast Interview:
wealthtrack-1945-keely-05-05-23-1080p