US debt default might trigger global financial crisis
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Treasury Secretary told CNN in an interview the debt default might cause the borrowing costs to increase.
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The Treasury Department is seen near sunset in Washington, Wednesday, Jan. 18, 2023 (AP Photo/Jon Elswick)
Treasury Secretary Janet Yellen warned on Friday, while congress has remained undecided on the debt ceiling, that a US default on its debt would set off a worldwide financial crisis.
“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.”
Read more: Biden: Raising Debt Ceiling Caused by Reckless Trump Era Spending
The fight over the debt ceiling has become an annual tradition in Congress between the ruling party (presently the Democratic Party with Janet Yellen being one of its office bearers) and the opposition (presently the Republicans most prominent among which is McCarthy the speaker of the house).
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.
