If the US Congress fails to reach an agreement to raise the debt ceiling, a “global economic recession” will be triggered. “Bankruptcy would threaten the progress we’ve made, that we’ve worked so hard for over the past few years during our recovery from the pandemic,” said Treasury Secretary Janet Yellen.
The debt ceiling is the maximum amount of debt the US government can take on by law. If that level is reached, the money will disappear and the US will no longer be able to pay interest on debts and take on new ones, among other things. Technically that means US failure, sees Yellen, who warns of an “unprecedented default.”
Failure would threaten the progress we have made
If it comes to that, an “economic and financial catastrophe” will occur. This week, US President Joe Biden is trying to work out a solution to the problem with the Republicans. Biden would like the ceiling to be raised unconditionally, but the Republicans do not want to participate. The party then presented a cut plan that will mainly affect Biden’s spearheads.
In fact, the debt ceiling had already been reached in January. But due to an accounting trick, Yellen was able to secure a possible stay of execution. Nonetheless, the minister expects the ceiling to be reached again on 1 June.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
