🇺🇸⚡️US Treasury Secretary Janet Yellen warned that a default in the US could lead to devastating consequences and a complete catastrophe in the economy.
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#debt #usa #ukrainewar #inflation #debtceiling #default #economy #finance #dollar #ustreasury #janetyellen #bonds #fed
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#debt #usa #ukrainewar #inflation #debtceiling #default #economy #finance #dollar #ustreasury #janetyellen #bonds #fed
She said that government spending would need to be cut to match tax revenues and that the spending of the population would also be reduced, leading to psychological consequences and further control of spending.
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Yellen also stressed that it is the responsibility of US President Joe Biden and the leadership of Congress to find a way out of the situation and raise the national debt ceiling.
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Technical defaults regularly occur in the US as a result of exceeding the year’s debt ceiling. A budget amendment is then made and the debt ceiling is increased. The Federal Reserve then automatically prints new dollars to purchase the next batch of Treasury bonds.
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This financial pyramid can grow without catastrophic consequences as long as there is demand for these bonds, especially from abroad.
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However, with the arrest of Russian reserves willing to buy these toxic papers, demand is decreasing. If the Federal Reserve becomes the only buyer, all emissions will go towards inflation in the US. This is already happening.
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