Unless Congress raises or suspends the debt ceiling, the US government is at risk of default. A solution is not yet in sight. The finance minister warns of “catastrophic” consequences.
In the opinion of Treasury Secretary Janet Yellen, a US government default would lead to a “recession”.
If Congress does not raise or suspend the debt ceiling in good time, there is a risk of “catastrophic” consequences, warned Yellen on TV broadcaster CNBC. “I absolutely expect that this would also cause a recession,” said the minister. The behavior in Congress endangers the recovery of the US economy from the Corona crisis and is “irresponsible,” said Yellen.
The Treasury Department has warned the US could run out of money by October 18. A default would damage confidence in the creditworthiness of the world’s largest economy, which could trigger a financial crisis and economic turmoil.
The two parties in Congress blame each other in the dispute over the ceiling increase. The Democratic President Joe Biden only accused the Republicans on Monday of blocking the increase for political reasons and thus playing “Russian roulette” with the US economy. A default would jeopardize the US dollar’s reserve currency status and lead to higher interest rates for US consumers, he warned.
The last applicable debt limit expired in July. Since then, the Ministry of Finance has been taking “extraordinary measures” to prevent a payment default. So far, Republicans and Democrats have still agreed to raise the limit – albeit often after trembling and several rounds of negotiations.
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
