A default on the American debt would "
for sure cause a recession in the United States and could lead to a global financial crisis
", warned Friday the American Minister of Finance, Janet Yellen, questioned on CNN.
The Treasury Secretary was speaking from Dakar (Senegal), where she was beginning a ten-day trip to the African continent, which will also pass through Zambia and South Africa.
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The United States reached its debt ceiling on Friday, set by Congress at more than 31 trillion dollars and for the time being elected officials have not been able to agree on an increase or suspension of the ceiling.
In itself, this event is not exceptional since this ceiling has been the subject of legislative intervention 79 times since 1960.
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But the Republican majority in the House of Representatives wants to take advantage of this subject to put pressure on the Democrats to lower a certain number of expenses, in particular those resulting from the programs put in place since the start of President Joe Biden's mandate, as well as the taxes.
"Undermining the role of the dollar"
In the event of a US default, “
our borrowing costs would increase and every American would see theirs follow the same trend
”.
"
But more than that, failure to make payment, whether it be our debt obligations, to the recipients of social spending, or to our military, would be sure to cause a recession in the United States and could result in a global financial crisis
,” assured Janet Yellen.
“
It would undoubtedly undermine the role of the dollar as a reserve currency used in transactions all over the world.
A lot of Americans would lose their jobs
,” she insisted.
With the ceiling reached, the US Treasury can no longer borrow, even short-term for working capital needs, and has implemented a debt issuance suspension period that will last until June 5.
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“
Exceptional measures
” have also been put in place, including the cessation of payment to several pension funds and health or disability benefits for public officials, technical adjustments that are not immediately necessary for the payment of pensions .
These measures allow the US administration to see ahead but can only be temporary and, if Congress fails to reach an agreement, the United States could eventually find itself in a situation of default.
