Yellen warns of “economic disaster”

to “financial disaster” US Treasury Secretary Janet Yellen warned of this possibility Congress failed to raise the government’s debt ceiling.

Doing so, he said, would lead to defaults and raise interest rates for years to come.

Yellen made the above warning at an event in Washington with California business executives, where she mentioned it A collapse of the US public debt would lead to job losseswhile pushing household premiums on mortgages, auto loans, and credit cards even higher.

He added that Congress has “primary responsibility” Increasing or suspending the borrowing ceiling $31.4 trillion, warning that default would threaten the economic progress the United States has made since the coronavirus pandemic.

We defaulted on our debts It would cause an economic and financial disaster. Bankruptcy would raise the cost of borrowing forever. Future investments will become significantly more expensive. warned Relent to members of the Sacramento Metropolitan Chamber.

The “falling dominoes” of American business

In the event that the debt ceiling is not raised, as Yellen stated, American companies will face a deterioration in the credit markets The government may not be able to issue paychecks to families of military personnel and seniors who rely on Social Security.

“Congress needs to vote to raise or suspend the debt limit. It should do so unconditionally. It shouldn’t wait until the last minute.” added, according to Reuters.

The US Treasury Secretary told lawmakers in January that The government can only pay its bills until early Junebut without increasing the limit.

Contrary to the tactics followed by others Developed countries, the United States places strict limits on how much they can borrow. Because the government spends more than it takes in, lawmakers must periodically raise the debt ceiling.

Last week, Kevin McCarthy, leader of the Republican-controlled House of Representatives, unveiled a plan It will double to 4.5 trillion. spending cuts dollarswith an increase of $ 1.5 trillion in the debt ceiling, stressing that it will form the basis for negotiations in the coming weeks.

The White House insists the two issues should not be linked, and the Democratic-controlled Senate will likely reject the proposal.

Financial markets appeared increasingly jittery, sending the cost of insuring US debt to the highest level in a decade, as financial analysts warned of the rising risk of default.

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