menu

Homepage > News > Yellen warns the US Congress of a possible insolvency

Yellen warns the US Congress of a possible insolvency


US Treasury Secretary Janet Yellen warned Congress that the money in the budget could run out as early as October and called for a swift raise of the debt limit.

The Secretary’s letter was sent to the leaders of Congress as a matter of urgency and calls for serious and swift action to be taken to raise the debt limit. Otherwise, the United States could go bankrupt in October.

Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations for the first time in our history. – Janet Yellen said.

The Secretary of the Treasury also stressed the importance of the consequences that such a situation could lead to. According to her words:

A delay that calls into question the federal government’s ability to meet all its obligations would likely cause irreparable damage to the U.S. economy and global financial markets.

The impact of the US debt on the market

The federal budget deficit will reach $ 2.3 trillion this year, the second-largest figure in the last 76 years. The US debt ceiling is critical to a country’s credit rating, and an unstable situation could lead to it being downgraded. In the worst-case scenario, where the US government becomes insolvent, medical services, the military, federal officials, and those receiving social benefits, pensions, and tax refunds may be cut off from funding.

Most observers, however, do not expect Congress to let this happen and anticipate that the debt limit will be raised. If their predictions come true, it will be the 78th time since 1969, when the United States increased debt permanently, temporarily, or redefined it.

The risk of a sovereign debt crisis is also complicating plans for an infrastructure bill slated to reach Congress in the coming weeks. For several decades, the largest financing package for the renovation of roads, bridges, airports and the power network, for the amount of USD 1 trillion, is already being played by investors looking for companies to which the largest part of the cake will go.

Author: Izabela Kamionka

Are you a trader?

Help others and rate your broker! Use the search engine or find your broker on the list.



Ad:

Last news:

Energy crisis in Europe:

Energy crisis in Europe: More companies in the sector go bankrupt

Every day, energy costs hit new records. At the same time, financial burdens in various ...
Read More
eToro with a 66% increase in commission income in the third quarter of 2021

eToro will close the fourth quarter with approximately $290 million in commission income

EToro, which is on track to go public in the United States through its merger ...
Read More
Will China live up to the trade promises made to the US?

Will China live up to the trade promises made to the US?

The signing of a trade agreement between China and the US in January last year ...
Read More
fpmarkets broker adds 550 CFDs per stock

FP Markets is expanding its offer with more assets

The FP Markets broker has expanded its offer with new products available on the MT4 ...
Read More

Add a comment

Your email address will not be published. Required fields are marked *

 

Note: Opinions and posts on ForexRev.com represent personal opinions and views of their respective authors and should not be interpreted as recommendations to purchase or sell securities. ForexRev.org assumes no responsibility or liability for such content.
Go to top