The US debt ceiling is a recurring mechanism by which Congress periodically threatens to blow up the global financial system and then, at the last possible moment, decides not to. The cycle is predictable. The risk each iteration is real.

Here is how it works. Congress authorizes spending through the budget process. Separately, it sets a legal limit on how much the Treasury can borrow to cover obligations it has already committed to. When spending exceeds revenue — which it does, consistently — the Treasury borrows. When borrowing approaches the ceiling, the Treasury uses “extraordinary measures” to extend the timeline. When those measures are exhausted, the US technically cannot pay its bills.