The presidential administration in the United States and the Opposition-controlled House of Representatives leadership have announced that they have come to an agreement in principle on raising the “debt ceiling” — the legally mandated level of debt that the US federal government can take on, which currently stands at about $31.4 trillion, until January 2025. This will come as a great relief to investors and others not only in the US but also in the broader world. The federal government is expected to run out of money on June 5 or thereabouts. It may have been able to meet its debt repayment requirements for some time thereafter by holding back on other expenditure, such as salaries. But the prospect of defaulting on some of its debt would then become very real. A US default would have been catastrophic for the markets; it is very hard to predict what the short-term effects of such a shock would have been, let alone the longer-term repercussions.