“Flirting with Default: US Treasury Secretary Janet Yellen Warns of Economic Danger”

Push the negotiations on the american debt to their limits is already dangerous in itself for the economy, Treasury Secretary Janet Yellen warned Thursday, while former President Donald Trump defends a tightrope strategy on the subject. Democrats and Republicans in Congress are currently unable to agree on raising the US public debt ceiling, and a impasse extended could result in a US default this summer, which would be unheard of.

The simple fact of flirting with such a situation “can also entail significant economic costs”, warned Janet Yellen during a press conference in Niigata (central Japan) where a meeting of finance ministers is held from Thursday to Saturday. and G7 central bankers.

“As we already learned in 2011, the mere threat of default can lead to a downgrade in our financial rating and weakened consumer confidence,” with interest rate hikes on loans, she added.

Global implications

A default in payment would produce an “economic and financial disaster” in the United States, with global repercussions, she also recalled, echoing similar statements from her and the White House in recent years. days.

Hours before Janet Yellen’s remarks in Japan, Donald Trump, who is seeking re-election as US President in 2024, urged Republican lawmakers to default unless they get cuts from Democrats “massive” budgets. US President Joe Biden has so far ruled out negotiating budget cuts and accused Republicans of holding the economy “hostage”.

“There is no good reason to generate a crisis ourselves,” insisted Janet Yellen again on Thursday, recalling that the American Congress had already raised or suspended the debt ceiling around 80 times since 1960.

(AFP)Show comments