The correlation between SNAP interruption and credit card debt The interruption of SNAP (Supplemental Nutrition Assistance Program) is highly correlated with credit card debt, especially in the context of the current government shutdown in 2025. This is mainly because SNAP beneficiaries (approximately 42 million low-income families, children, and the elderly) are often high-risk groups for credit card debt, with limited monthly income and relying on these benefits to cover basic food expenses. Once SNAP funding is interrupted (as happened this month, affecting $8 billion in monthly aid), these families will turn to credit cards or borrowing to sustain their livelihoods, leading to a surge in debt accumulation and overdue risk. According to reports, the closure has resulted in millions of beneficiaries being unable to receive food aid in November and instead increasing credit card usage, potentially triggering a debt "snowball effect". ———— What if most of the insured individuals are unable to pay their credit card debts within two months? Here, 'protected individuals' refer to low-income groups who rely on benefits such as SNAP. If the government shutdown is extended to two months (starting from the current 36th day) and SNAP funds are completely depleted (emergency funds have been exhausted), it will amplify the impact: -Short term consequences: The overdue rate has skyrocketed. About 16 million children and low-income families will face food shortages and switch to credit cards to purchase essential items, resulting in an increase of several hundred dollars in monthly debt. According to reports from credit card companies such as Visa and Mastercard, the delinquency rate for low-income groups has increased by over 20% during the 2018-2019 closure period; If this shutdown continues, it is expected that the national credit card bad debt rate will rise from the current 3% to 5-7%, affecting millions of accounts. A decrease in personal credit score (FICO score drops by 50-100 points) increases the difficulty of future loans. -Mid term chain reaction: weak consumption. Low income groups consume 20% of the US GDP, and disruptions will drag down retail and supermarket sales, resulting in a weekly loss of approximately $1 billion in GDP. Banks (such as JPMorgan) may tighten credit, triggering a cash flow crisis for small businesses; The unemployment rate has risen by 0.2-0.5%, exacerbating inequality. -Overall economic shock: CBO (Congressional Budget Office) estimates that a two month shutdown will result in irreversible losses of $14-28 billion, including unpaid federal employees (affecting 800000 people) and delays in state-level aid. This is not an isolated event, but rather an amplification of inflationary pressure (food prices have risen by 5% due to aid interruptions). Based on the White House shutdown scenario, this is highly realistic: although the court ordered the use of emergency funds, the Trump administration threatened "only partial recovery", and if the stalemate persists, the above risks will quickly become apparent. ——— Possible reactions of the Federal Reserve based on this data The Federal Reserve (Fed) sees the shutdown as a "temporary shock," but extending it to two months will trigger more aggressive intervention to prevent an economic "hard landing. The second interest rate cut was made on October 29th (with the benchmark rate lowered to 4.5-4.75%), aimed at buffering the drag on growth and employment caused by the shutdown. Chairman Powell stated at the press conference that the shutdown would "temporarily suppress activity, but be reversible after it ends; If data deteriorates (such as credit card delinquency reports or rising unemployment rates), the Fed may: -Further interest rate cuts: The November or December meeting will further reduce interest rates by 25-50 basis points, with the goal of stimulating consumption and credit flow. -Quantitative easing (QE) restart: if GDP Q4 drops by more than 1%, buy treasury bond to inject liquidity and support banks to absorb bad debts. -Monitoring indicators: Focus on tracking credit card data (through the New York Fed report) and consumer confidence index (CCI). If it falls below 80, it will accelerate action. History is like the 2013 shutdown, where the Fed hinted at "unlimited QE" to stabilize the market. Overall, the Fed prioritizes employment over inflation, and the response is expected to be mild but timely. ——— Possible response from the Treasury The Ministry of Finance is responsible for debt management and key payments during the shutdown, but its authority is limited (unable to allocate funds on its own). The IRS shutdown emergency plan has been released, retaining approximately 5000 employees to handle tax and debt ceiling matters. If a two month scenario occurs, the Ministry of Finance may: -Debt ceiling response: Early warning to Congress (date X is approaching), using "extraordinary measures" to divert social security funds to delay default, but benefits such as SNAP do not have this buffer, resulting in a shortage of funds at the state level. -Emergency aid coordination: Promote court mandated SNAP restoration (such as recent bans) and collaborate with states to issue temporary food vouchers; At the same time, the ban on large-scale federal employee layoffs (RIFs) has been extended by the court until the end of the shutdown. -Economic stability: Minister Yellen (or successor) will update the debt dashboard daily, and if a credit card crisis emerges, it is recommended that Congress pass a temporary appropriation (CR); In history, the Ministry of Finance has misappropriated $90 billion in emergency funds to maintain social security. But if the deadlock persists and the influence of the Ministry of Finance weakens, it will shift to a "crisis management" mode, prioritizing the avoidance of credit rating downgrades (S&P has warned). In short, this is a vicious cycle: SNAP interruption → debt surge → economic slowdown → Fed/Treasury intervention. But the ultimate cure is still the congressional agreement. I am continuously monitoring the progress of Congress In my opinion, after studying quickly for half an hour, the changes in the SNAP bill will have the greatest impact on the possibility of the federal government resuming work In my humble opinion, two months may be the upper limit for the federal government shutdown What kind of interest rate environment does Trump want in the midterm elections? What things does he hope to accelerate? What exactly is BTC to him? What exactly is AI to him? Why is the TGA account only allowed to enter and not exit here (through extreme measures such as suspension) Is the risk exposure of the opposing party exposed and leading to attacks? ——— The above questions are all random guesses ⬆️ For entertainment only