If Biden fails to meet the debt ceiling, it will be catastrophic… Yellen causes global financial crisis

Minister Yellen. Photo = Yonhap News

On the 20th (local time), US Treasury Secretary Janet Yellen said, “If the US federal government does not raise its debt ceiling, it might fall into default, which might lead to a global financial crisis.” urged

Minister Yellen, who is on a tour of three African countries, appeared on CNN that day and said, “The possibility of a default in the United States might lead to a global financial crisis.” “he said.

When it becomes a reality, he fears, we will see a lot of people lose their jobs and see the cost of borrowing rise.

Secretary Yellen, who has been concerned that the US federal government might default if the debt ceiling issue is not resolved, sounded a stronger warning, saying that this issue might lead to a global financial crisis.

President Joe Biden also invited Democratic and Republican mayors to the White House, who attended the National Mayors’ Meeting that day, and said, “If we do not adequately respond to the national debt ceiling, it will be a calamity that surpasses everything that has happened financially in the United States so far. that,” he feared.

He explained that in his New Year’s State of the Union address scheduled for the 7th of next month, he would address the debt issue and the fiscal year 2024 budget bill.

“I’m going to have a little discussion regarding it (the debt ceiling issue) with the new House majority leader,” hinting at speaking with House Speaker Kevin McCarthy. He did not say when this meeting would take place.

House Speaker McCarthy immediately responded by posting on Twitter, saying, “I accept the invitation to discuss raising the responsible debt ceiling to address irresponsible government spending.”

Previously, the US government had asked Congress to raise the debt ceiling, saying that the total debt would reach the set limit of $31.4 trillion (regarding 3.8873 trillion won), but the Republican Party, the majority party in the House, rejected it in connection with cutting government spending.

Eventually, when the debt ceiling was reached the day before, the Treasury Department began implementing special measures such as deferring new payments of federal civil servant retirement and disability pension (CSRDF). Yellen has described this measure as a measure to prevent default until June 5.

Under the current circumstances, if the debt ceiling is not raised, additional federal spending might be blocked, causing the government to default, and the US economy might fall into a deep recession.

For this reason, Minister Yellen sent a letter to the Senate and House leadership on the 13th and strongly requested that the debt ceiling be raised.

Shin Min-kyung, Hankyung.com reporter [email protected]