Podcast Episode - What You Need to Know About The Debt Ceiling


Debt, Investing, Podcast, Saving


January 29, 2023

Listen to Podcast Episode:

On today’s episode, Suze walks us through fears we may have about the US Debt Ceiling and gives an update on an opportunity to secure our money.


Podcast Transcript:

00:00:39

Suze: January 29th 2023 Welcome everybody to the Women and Money podcast as well as everybody is smart enough to listen. Suze O here and today we will be going to Suze School but I just have to say before I start,

00:01:09

Suze: how excited are you today? I'm so excited about today. And are you wondering why am I so excited? Because I love football and I can't wait to see the games for many of you who have written in, I am rooting for the San Francisco 49ers and that is because for so many years I lived there, but I'm also rooting for the Kansas City Chiefs because I just think Mahomes is the cat's meow

00:01:15

Suze: and that's the scoop. So now you know what I am doing. Next...

00:01:23

Suze: I have to tell you in all the time. I've been doing this for the Suze Orman show.

00:01:24

Suze: I have never gotten as many emails or posts with questions that are asking the exact same question across the board.

00:01:41

Suze: And that question is this: Suze,

00:02:05

Suze: If they don't raise the debt ceiling and they default on the debt, does that mean I am going to lose all the money that I have in Treasuries? Series I bonds certificates of deposit? Suze, does that mean I'm going to lose all of my money if they do that?

00:02:20

Suze: I want you to listen to me closely now. Alright, first of all now we're going to Suze School, I just want to talk to you about how much money is in Treasuries

00:02:22

Suze: as of December of last year,

00:02:26

Suze: Do you know that? There was $24 trillion dollars in Treasuries at that time.

00:02:35

Suze: Now, who owns those treasuries? I'm going to say that amount again, $24 trillion.

 00:02:48

Suze: So the majority of it, a very large portion of it is held by the foreign governments.

00:02:55

Suze: Foreign governments take their money because they think the money in the United States investing in the United States is far more stable than their own country. So think about that for a second

00:03:13

Suze: and they think about that because Treasuries are backed by the full faith and credit of the United States. Those words are very strong words

00:03:27

Suze: And so strong that other countries, foreign governments take their money and put it here. So a large portion of the $24 trillion Federal Reserve,

00:03:54

Suze: State and local governments, mutual fund companies, pension funds, insurance companies and holders of savings bonds as well as the Social Security Trust fund owns a significant portion of this debt.

00:04:17

Suze: So I just want you to really think about all the entities that I just named because it's not just will you lose your money, It's everybody in the United States of America, every major entity, the pension funds that pay all the pensions to all the Workers, Social Security, all of that.

00:04:43

Suze: Everybody would go down. I just think about that for a second.

00:04:50

Suze: Okay. Next you did ask about certificates of deposits, are they safer? There was $154 billion dollars in certificates of deposits that were deposited last year.

00:05:08

Suze: Now that also is a whole lot of money and so many of you feel safe putting your money rightfully. So by the way in a certificate of deposit

00:05:38

Suze: because the F. D. I. C. for banks, the N. C. U. A. for credit unions ensure your deposits up to $250,000 and that's per person. So there are many, many different ways that you can put large sums of money in

00:06:03

Suze: to a certificate of deposit and still be covered with insurance. Now I did an entire Suze School on May 1st of last year. All about how to increase limits on F. D. I. C. and N. C. U. A. insurance. However, oh there's one other entity that happens to invest in Treasuries

00:06:18

Suze: The F. D. I. C. and the N. C. U. A. where do they put the money that needs to be insured for you for your deposits? They buy treasuries with that.

00:06:19

Suze: So now I'm expanding that if they didn't raise the debt ceiling, if they defaulted, Do you realize the ramifications of that?

00:06:33

Suze: It is beyond anybody's ability to even fathom. So people can threaten the congressman that are doing this can say we're not gonna do it. We're not going to do. Oh give me a break. There is nobody in congress today...

00:06:52

Suze: The majority of people anyway, that would ever ever let this happen. And the reason is because of everybody who owns this. However, I wanted to make sure. So I thought who could I ask? That would be honest with me. That would tell me for sure

00:07:14

Suze: what they thought. And I realized, oh my God I have to get in touch with Sheila Bair.

00:07:47

Suze: Sheila Bair was the chairman of the F. D. I. C. The Federal Deposit Insurance Corporation for years. And she was the one in charge of everything in 2007, 2008 when there was going to be a run on the banks. So nobody knew better, because remember F. D. I. C. insurance and see you a invested in Treasuries.  Nobody

00:08:16

Suze: knows this area better than Sheila. And we happen to be very good friends. In 2008 when everybody thought there was going to be a run on the banks. Sheila came to me, we did a public service announcement that was blasted everywhere, as to why F. D. I. C. and N. C. U. A. are absolutely safe and sound

00:08:37

Suze: so you don't have to take your money out of banks. You don't have to take your money out of credit unions. You're absolutely safe. Different situation then than what's being threatened now. But this woman knows her stuff. So I wrote her and here's what she wrote me back just yesterday.

00:08:59

Suze: She said Suze. It would be June at the earliest before the treasury would run out of borrowing capacity to meet its debt obligations. I have a high level of confidence that this will be worked out before them. I really think the risk of default is nil.

00:09:15

Suze: There will be a lot of drama. But at the end of the day, the rational people in Congress and they are still in the majority in both parties will make sure the debt limit is raised or suspended to avert  a default.

00:09:17

Suze: The short answer is there is no place to hide. If the US government defaults, it would be cataclysmic. Which is why I have a high level of confidence. It just won't happen. 00:09:32

Suze: She then went on to say

00:09:55

Suze: it's a childish idea to play daring games with the debt limit members of Congress doing so should read my book, Billy the Borrowing Blue Footed Booby about the high cost of not paying your debt. It's written for kids. So bottom line, here's what

00:10:00

Suze: Sheila Bair and she is somebody who knows she knows what she's talking about. She's dealt with this for years in the past.

00:10:09

Suze: The bottom line that Sheila is saying is do not let their idle threats scare you. This is something that cannot happen because if it happens, it will be in her words, cataclysmic meaning everything will go down and truthfully there is no place that anybody could put money that would not be affected by it.

00:10:37

Suze: So I don't know if that makes you feel any better or not. But it just seems to me that it makes absolute sense. If you think about it, you think about the trillions of dollars, you know, 24 trillion and that was as of December last year. Probably more right now, people. It's just not going to happen.

00:11:03

Suze: Now, let's talk about Alliant Credit Union and Treasury bills.

00:11:09

Suze: Last week I told all of you that you were going to be able to buy Treasury bills through Alliant Credit Union

00:11:16

Suze: this week. I'm telling you, No, you will not be able to.

00:11:20

KT: Hi Suze! I'm coming to Suzy's school so that I can help everyone understand the real reason why you're not going to be buying Treasury bills through Alliant.  

00:11:32

Suze: You don't think I was capable of telling them?

00:11:34

KT: No! It's so complicated everybody that Suze and I looked at each other and said, wait a minute.

00:11:51

KT: The whole beauty of Alliant and Suze's advice is that it's straight up, it's easy to understand and you can just do it set and forget it. And when I try to look at what it's gonna take to open a Treasury bill. I said, Suze, forget it. I'm not going to do this.

00:12:12

Suze: All of you can blame Miss Travis for the reason that we're not going to be doing this.

00:12:18

KT: And you'll thank me because listen to what Suze and Alliant came up with. It's so much better. So much easier. And I can't wait to do it in a couple of weeks. Tell everyone.  

00:12:35

Suze: I can't believe this. Everybody alright? So listen to me. Right. We decided not to do it because when KT tried to do it, when we were looking at it, it was just too complicated. She went crazy. And I realized, oh my God, everybody was saying, please figure out how to do it at Alliant because everywhere else is just too complicated. All right, everybody can we just put a pin in what I was saying for one second because I understand very well that many of you. I know you, I know you you're thinking, what are you talking about? Susie wasn't complicated to open up an account of Treasury Direct dot Gov or buy Treasuries at my brokerage account.

00:13:05

Suze: Well, you weren't the ones getting the thousands of emails that I was getting saying the following,

00:13:14

Suze: Suze, I tried to open up an account to buy Treasuries at Treasury Direct dot Gov. But they want something called the medallion. I don't even know what a medallion is. And so can you help me? Or Suze, I don't have a brick and mortar bank

00:13:34

Suze: and therefore I can't find anywhere and anyone that will give me a Medallion. So I cannot open up a Treasury Direct dot Gov account now for those of you who don't know a Medallion is a stamp that a bank will give you a brick

00:13:54

Suze: and mortar bank will give you because they need to see you in person. You need to prove that you are who you are. And normally you also have to have an account with them. If you don't have the medallion and Treasury Direct dot Gov is asking for it, you cannot open up an account with Treasury Direct dot gov. Next, many of you are saying Suze, I opened up an account at Treasury direct dot gov and bought Series I bonds

00:14:24

Suze: but I misplaced my password, my account number, whatever it is. And I've been on the phone with them for hours and they won't let me in. They won't answer me. So, can you help me? And the answer to that was no, I can't. Or many of you said to me, Suze,

00:14:43

Suze: I tried to buy Treasury bills through my brokerage account online, but I just can't figure it out. And even though I would send you instructions, you would write back and go,

00:14:55

Suze: it's just too complicated. I am not buying treasury bills or last but not least I have my money at Alliant Credit Union. I don't want to open up another account anywhere. Please figure out how I can do this through Alliant. So I wanted to make it easier for you. Well, guess what?

00:15:22

Suze: It would not have been easier for you. So here's what we're doing instead. So much better. Instead of you being able to buy 3 to 6 month treasury bills at Alliant Credit Union. Well, you tell them KT.

00:15:48

KT: So Suze got on the phone with the CEO. They talk all the time. Suze and Alliant are very, very tight. They talk a lot and they try to come up with things that are really great for all of us. So here's what they did. I'm so happy. I can't wait to do it.

00:16:08

KT: Dennis Devine said Suze, I'm going to do something really special for your listeners. And for all of the ultimate opportunity, account holders, we are going to offer a three or six month CD certificate of deposit which will allow them to earn the

00:16:17

KT: same rate at that particular time, they would have earned with a T bill. So bravo Alliant and bravo susie. So I'm so happy.

00:16:18

Suze: Did you all understand what she just said? Easy. It's easy and that's all KT cares about. Just so you know.

00:16:26

Suze: So we're not going to be offering Treasury bills but you can through your ultimate opportunity savings account starting in about a month or so. Be able to purchase what KT?

00:16:43

KT: Certificates of Deposit C. D.s, baby for three or six months or even a year. But 3 to 6 months is what she wants us all to do.

00:16:47

Suze: Yeah you can purchase any length of time that they offer but I do as you know want you into short

00:16:53

Suze: term certificates of deposit at Alliant.

00:16:56

KT: She's really she she wants us all to pay attention to the interest rate trends more than anything. So that's why the 3-6 is probably the smarter way to go. So I'm going to do that to.

00:17:08

Suze: KT, are you educating them now?

00:17:10

KT: Yes.

00:17:10

Suze: This is not your role here on Suzy School.

00:17:14

KT: I'll tell you all about it because I will be one of the first people to buy a six month.

00:17:20

KT: I'm gonna buy a three and a six.

00:17:23

Suze: I'm just looking at her like...

00:17:25

KT: and then and then I'll tell them how easy it is. I will, I'll tell them how long it took me to do it.

00:17:31

Suze: Oh God. Anyway, what I really want you all to be aware of is that there is a difference between treasuries and certificates of deposits. And the main difference I want you to understand is this when you have a Treasury and it pays you interest. Yeah. You owe taxes on the federal level on that interest. But you do not have to pay taxes on the state level.

00:18:02

Suze: Got that? For a certificate of deposit. You pay taxes on the federal level and the state level. So what does that mean? It means for those of you

00:18:15

Suze: who are in a really low income tax bracket or you live in a state that doesn't have any state income tax like Florida like me and KT, which is why she's so anxious to buy three and six month certificates of deposits. So if that's your situation

00:18:39

Suze: then all right... you don't have a problem with this. However, if you happen to live in a state like New York, California where state income tax is over the top,

00:18:53

Suze: then treasury bills would be the way for you to go. The point of all of this really is you do have an alternative. Now, for many of you, that is the way you should go for many of you. You may just want to stick with treasuries, but it's no big deal. Either way. You have to do what's best for you.

00:19:17

KT: Okay, Suze. I'm gonna leave class now. What do you want to say?

00:19:20

Suze: Goodbye! Alright. So that's what I wanted to tell you about The Alliant Credit Union. So now, you know. So the one other thing though I do want to tell everybody, KT is you've also been asking about when will the must have documents go back on,

00:19:39

Suze: sale and they are going to be back on sale in approximately one month. So look for him there and they will be totally updated. Alright, KT, how do we end the podcast?

00:19:53

KT: So we want everyone wherever you go today. Whatever team is playing today. We're going to create

00:20:00

KT: a peaceful, joyful and loving world.

00:20:04

Suze: Oh God, Why me? I was doing so great. Anyway.

00:20:08

KT: They like when I come into school.

00:20:09

Suze: I'm sure they do. Alright. Everybody, you stay safe. And remember everybody don't ever stop yourself from doing something that you want to do. All right, bye bye.


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