United States | Failure to pay could lead to ‘historic financial crisis’

In an editorial published in The Wall Street Journal“The United States has never failed,” recalls Janet Yellen.

“This could potentially lead to a historic financial crisis […]. A default could lead to higher interest rates, a sharp drop in stock prices and other financial turmoil,” Treasury Secretary Joe Biden wrote.

The debt ceiling, which only Congress can raise, went into effect on 1^{He is} August.

The United States is prohibited from issuing new debt to finance itself if the current limit of $28.4 trillion is not raised.

This recovery is the subject of political arm wrestling in Congress on a regular basis. Since the 1960s, the debt ceiling has been raised or suspended about 80 times.

And the Treasury Department indicated last week that the United States will run out of funds “during the month of October.”

NS^I In his editorial, Yellen describes a series of financial disasters if the borrowing capacity of the United States is not raised, in order to be able to meet deadlines.

Within days, millions of Americans will be in financial distress […]. Nearly 50 million seniors will no longer receive their pension checks and soldiers will no longer receive their paychecks.

“We will emerge from this crisis as a permanently weak nation,” the Treasury secretary said.

Even if the United States never fails — “not once,” M . asserts^I Yellen – Remembers the 2011 episode “That Pushed America to the Brink of Crisis.”

Under the Obama administration, political deadlock in Congress led rating agency Standard & Poor’s to withdraw the “AAA” rating of US debt, causing a shock wave in the markets.

m . adds^I softens. The past 17 months have tested the economic strength of our country. We are just beginning to emerge from the crisis. “We must not go back to a completely avoidable situation,” she concluded.