US Debt Default Will Trigger Global Financial Crisis, Treasury Secretary Yellen Warns
US Debt Default Will Trigger Global Financial Crisis, Treasury Secretary Yellen Warns
WASHINGTON (UrduPoint News / Sputnik – 20th January, 2023) A debt default by the United States will trigger a global financial crisis, Treasury Secretary Janet Yellen warned on Friday as the US government remained without an agreement in Congress to extend its approaching� debt limit.
“If that happened, our borrowing costs would increase and every American would see that their borrowing costs would increase as well,” Yellen told CNN in an interview, referring to a potential debt default. “On top of that, a failure to make payments that are due, whether it’s the bondholders or to Social Security recipients or to our military, would undoubtedly cause a recession in the US economy and could cause a global financial crisis.”
The debt limit drama has become a yearly political fight in Congress between the party in power � the Democrats and its office bearers like Yellen � and its rivals � now made up of Republicans.
A drawn-out struggle to raise the nation’s debt ceiling in 2011 triggered a financial crisis that culminated in major credit rating agency Standard & Poor’s stripping the United States of its top triple-A credit status.
The Treasury announced on Thursday that it has taken “extraordinary measures” to avoid a government debt default by temporarily suspending payments not immediately needed by Federal retirement, disability and health benefit funds and channeling the money instead to other urgent services needed to keep the government running until June at least.
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