US Treasury Secretary Janet Yellen recently announced that “exceptional measures” would have to be taken this week to prevent the United States from defaulting on its debt. Why is this so crucial and will the debt ceiling have to be raised again?
Défaut de paiement de la dette des États-Unis : pourquoi cette éventualité inquiète ?
The United States risks defaulting on its debt
“The impossibility of meeting the obligations of the State would cause irreparable damage to the US economy.It is with these words that the Secretary of the Treasury described the situation, in a public letter sent to the new Speaker of the House, Kevin McCarthy. Time is running out for Janet Yellen and the US Treasury, which must act this week to prevent the US from falling into debt default in the coming months.
The solution envisaged is to raise the public debt ceiling once again. This one reaches a colossal rate of 121% of GDP, and is now close to its ceiling set at 31.4 trillion dollars. Raising it would avoid default. According to Janet Yellen, the measure “does not mean authorizing new spending, but authorizing the government to finance [ses] legal obligations.»
👉 Do not miss our guide – How to buy Bitcoin in 2023?
Ledger Stax, designed for NFTs by the creator of the iPod
🔥 The world leader in crypto security
What are the risks of default?
The Biden government is caught between a rock and a hard place. On the one hand, the new Republican Speaker of the House of Representatives has made the subject an issue in his campaign, and called the situation irresponsible :
“Spending is out of control, there is no supervision. […] We need to change the way we recklessly spend money in this country. »
But on the other hand, the risks of default overshadow the political issue. In the event of default, the Treasury will not have no longer the possibility of borrowing on the financial markets to pay government bills. And in this case, the entire American economy would be in danger. A point highlighted by Janet Yellen, explaining that the situation threatened the “livelihoods of all Americans, as well as global finance“.
👉 Also read – Bitcoin (BTC): the fundamental key is inflation in the United States
Order our Book to understand everything about cryptos
Published by Editions Larousse
A ceiling that is not one
As a reminder, this famous ceiling only has a ceiling in name: since 1960, it has been raised 79 times, to accommodate the growing debt of the world’s largest economy. But this time, tensions should be bitter between the Republicans, who make it a key issue, and the Democrats who find themselves hand and foot tied.
The Republicans are likely to play on this tension, and wait until the last moment before eventually finding an agreement – this was what happened in 2021 the last time the cap was raised. Anyway, all this shows the explosive mixture of these political and economic issuesthe consequences of which could go far beyond the United States House of Representatives.
👉 To go further – Economic slowdown, long-term uncertainty… The IMF’s pessimistic forecasts for 2023
Progress in the world of cryptocurrencies with Cryptoast experts 📘
Source: United States Department of the Treasury, press release
Newsletter 🍞
Receive a summary of crypto news every Monday by email 👌
What you need to know about affiliate links. This page presents assets, products or services relating to investments. Some links in this article are affiliated. This means that if you buy a product or register on a site from this article, our partner pays us a commission. This allows us to continue to offer you original and useful content. There is no impact on you and you can even get a bonus by using our links.
Investments in cryptocurrencies are risky. Cryptoast is not responsible for the quality of the products or services presented on this page and could not be held responsible, directly or indirectly, for any damage or loss caused following the use of a good or service highlighted in this article. Investments related to crypto-assets are risky by nature, readers should do their own research before taking any action and only invest within the limits of their financial capabilities. This article does not constitute investment advice.
AMF recommendations. There is no guaranteed high return, a product with high return potential involves high risk. This risk-taking must be in line with your project, your investment horizon and your ability to lose part of this savings. Do not invest if you are not ready to lose all or part of your capital.
To go further, read our Financial Situation, Media Transparency and Legal Notices pages.
Journalist at Cryptoast, I fell into the pot of cryptocurrencies a few years ago. I am passionate about the innovative technologies that stem from the blockchain and I like to find the most crispy information to share with you.
Marine Debelloir
2258 items
