WASHINGTON, Jan 20 The inability of the US government to pay its obligations will lead to a recession in the US economy and could trigger a global financial crisis, Treasury Secretary Janet Yellen said.
«The inability to make scheduled payments, whether it's bondholders or Social Security recipients or our military, will no doubt lead to a recession in the US economy and could trigger a global financial crisis,» Yellen said in a statement. CNN interview.
The Minister added that all Americans will feel the consequences of these events and many will lose their jobs.
«If that happens, the cost of borrowing for us will go up and every American will see their borrowing costs go up as well,» she said.
Yellen also stressed that as a result of the inability to pay the bills, the rating of US debt obligations could be downgraded.
«This will definitely undermine the role of the dollar as a reserve currency that is used in transactions around the world,» the minister concluded.
Yellen on Thursday notified Congress of the launch of «extraordinary measures» in connection with the estimated achievement of the national debt ceiling and called on lawmakers to quickly increase borrowing limits to avoid a default.
The «extraordinary measures» boil down to the fact that the Ministry of Finance for the period from January 19 to June 5 suspends deductions in the form of special treasury obligations to two social funds that serve state employees — the Civil Service Fund for Pensions and Disabilities, and See also Postal Service Retirement Medical Benefit Fund.
She assured that the suspension will not affect payments to beneficiaries of the funds, the ministry will fully reimburse lost investments when Congress authorizes an increase in the national debt ceiling from the current $31.381 trillion. Earlier, she warned that the reserves available to the ministry would be enough until the beginning of summer, after which a default becomes possible.
The administration of US President Joe Biden on Thursday refused to discuss with Congress the conditions for raising the national debt ceiling and called for an immediate decision to increase its level.