A debt crisis occurs when a country is unable to repay its loans. Because it is overarching, a debt crisis is indicative of the overall heath of the national economy, international loans, and budgeting. When a country is faced with a debt crisis, it cannot pay off its financial obligations and must seek out assistance.
The United States faced a debt crisis on the heels of the housing market collapse and overall weakening economy. In December 2007, the U.S. entered into the Great Recession—and it lasted for 18 months. Over that time, the economy ground to a halt; businesses and individuals began to default on loans and banks saw their balance sheets shrink. To stave off further economic shock, banks made it more difficult to borrow, as cutting off liquidity means businesses cannot invest in growth and individuals cannot consumer.
To stave off an all-out economic collapse, the Federal Reserve stepped in with its first of three rounds of quantitative easing in November 2008. Since that time, the Federal Reserve has printed over $3.0 trillion and the U.S. national debt has soared from roughly $9.0 trillion to $18.0 trillion. The U.S. continues to run a budget deficit and does not expect to run a surplus until 2024; this means the U.S. debt crisis will not be under control for another decade.