United States public debt: Janet Yellen says the country could go into recession if this issue is not addressed

United States public debt: Janet Yellen says the country could go into recession if this issue is not addressed

The Secretary of the Treasury, Janet Yellen, expressed her concern about the financial situation of the United States, since she believes that the economy would enter a recession if Congress does not address the issue of the public debt limit before a default occurs. .

Janet Yellen expressed in an interview with CNBC that in her opinion the issue should be resolved no later than October 18, in this sense the secretary stated that “it would be catastrophic not to pay the bills.” He acknowledged that being uncertain about the issue puts the Treasury in a position where they would lack the financing to pay them debts.

Failing to pay would cause financial chaos in the United States and the entire production chain, for this reason, President Joe Biden asked Congress yesterday raise the debt limit this week and avoid even approaching an almost certain economic crisis.

The president openly blamed Republicans and Senate Minority Leader Mitch McConnell for getting in the way to give certainty to the law that would allow increasing the loan limit.

The Treasury Department is using the extraordinary emergency measures to pay American income since it hit the last debt ceiling in late July. Extraordinary measures allow the department to conserve cash and withdraw certain accounts without issuing new bonds.

According to Treasury estimates, the measures are temporary and will only last until mid-October. So far, the United States has not stopped paying its commitments, but experts argue that a breach would cause widespread damage through an increase in interest rates.

If debt payments are not met, the government could delay the issuance of Social Security checks, which benefit 50 million older adults. This could put the family economies of this sector of the population in serious trouble, which, in many cases, do not have any other income to survive.

Lawmakers from the two existing parliamentary groups in the Congress, Senate and House of Representatives have admitted that the debt ceiling must be increased or there is a risk of a massive economic collapse. Despite this, neither the Democrats nor the Republicans have reached an agreement despite the dangers looming on the horizon for the country.

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