US Treasury’s Yellen: Debt default would ‘permanently’ weaken America

“We can borrow more cheaply than almost any other country, and defaulting would jeopardize this enviable fiscal position. It would also make America a more expensive place to live, as the higher cost of borrowing would fall on consumers,” Yellen wrote. – A + A WASHINGTON (Sept 20): U.S. Treasury Secretary Janet Yellen issued a fresh plea for Congress to raise the federal debt ceiling on Sunday, arguing a default on U.S. debt would trigger a historic financial crisis. In a Wall Street Journal opinion piece, Yellen said that the crisis triggered by a default would compound the damage from the continuing coronavirus pandemic, roiling markets and plunging the U.S. economy back into recession at the cost of millions of jobs and a lasting hike in interest rates. “We would emerge from this crisis a permanently weaker nation,” Yellen said, noting that U.S. creditworthiness has been a strategic advantage. Yellen did not offer a new timeline for a possible default, but described economic damage that would fall on consumers through higher borrowing costs and lower asset prices. She has said previously that a default could come during October when the Treasury exhausts its cash reserves and extraordinary borrowing capacity under the… Read full this story

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