Unless Congress raises or suspends the debt ceiling, the US government is at risk of default.
Treasury Secretary Janet Yellen warns of “catastrophic” consequences.
Washington - Treasury Secretary Janet Yellen believes that a US government default would lead to a “recession”.
If Congress does not raise or suspend the debt ceiling in time, there is a risk of “catastrophic” consequences, warned Yellen on TV broadcaster CNBC.
"I absolutely expect that this would also cause a recession," said the minister.
The behavior in Congress endangers the recovery of the US economy from the Corona * crisis and is "irresponsible," said Yellen.
The Treasury Department has warned the US could run out of money by October 18.
A default would damage confidence in the creditworthiness of the world's largest economy, which could trigger a financial crisis and economic turmoil.
US President attacks Republicans: Playing "Russian roulette" with the US economy
The two parties in Congress blame each other in the dispute over the ceiling increase.
The Democratic President Joe Biden * only accused the Republicans on Monday of blocking the increase for political reasons and thus playing "Russian roulette" with the US economy.
A default would jeopardize the US dollar's reserve currency status and lead to higher interest rates for US consumers, he warned.
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The last applicable debt limit expired in July.
Since then, the Ministry of Finance has taken “extraordinary measures” to prevent a payment default.
So far, Republicans and Democrats have still agreed to raise the limit - albeit often after trembling and several rounds of negotiations.
(dpa) * Merkur.de is part of IPPEN.MEDIA.