Yellen warns of 'global financial crisis' if US debt limit agreement isn't reached - CNN

CNN  — 

Treasury Secretary Janet Yellen connected Friday warned of the wide planetary effects that could beryllium felt if the national authorities exhausts bonzer measures and fails to rise the indebtedness ceiling, telling CNN’s Christiane Amanpour about the ways mundane Americans could face stark consequences.

Yellen’s informing comes aft the United States connected Thursday deed its $31.4 trillion indebtedness bounds acceptable by Congress, forcing the Treasury Department to commencement taking bonzer measures to support the authorities paying its bills.

While those recently deployed bonzer measures are mostly behind-the-scenes accounting maneuvers, Yellen told Amanpour that “the existent day astatine which we would nary longer beryllium capable to usage these measures is rather uncertain, but it could conceivably travel arsenic aboriginal arsenic aboriginal June.”

Speaking exclusively to CNN from Senegal, Yellen said that aft the measures are exhausted, the US could acquisition astatine a minimum downgrading of its indebtedness arsenic a effect of Congress failing to rise the indebtedness ceiling. The effects of the national authorities failing to marque payments, she argued, could beryllium arsenic wide arsenic a “global fiscal crisis.”

“If that happened, our borrowing costs would summation and each American would spot that their borrowing costs would summation arsenic well,” Yellen said. “On apical of that, a nonaccomplishment to marque payments that are due, whether it’s the bondholders oregon to Social Security recipients oregon to our military, would undoubtedly origin a recession successful the US system and could origin a planetary fiscal crisis.”

“It would surely undermine the relation of the dollar arsenic a reserve currency that is utilized successful transactions each implicit the world. And Americans – galore radical would suffer their jobs and surely their borrowing costs would rise,” she continued.

Yellen wrote a missive to House Speaker Kevin McCarthy connected Thursday explaining the measures being taken, escalating unit connected Capitol Hill to debar a catastrophic default.

Hardline Republicans person demanded that lifting the borrowing headdress beryllium tied to spending reductions. The White House has countered by saying that it volition not connection immoderate concessions oregon negociate connected raising the indebtedness ceiling. And truthful far, Yellen’s warnings person failed to spark bipartisan discussion, with some Republicans and Democrats reaffirming their rigid positions implicit the past week.

As portion of the indebtedness issuance suspension play utilizing bonzer measures, the bureau intends to merchantability existing investments and suspend reinvestments of the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund. Also, it volition suspend the reinvestment of a authorities securities money of the Federal Employees Retirement System Thrift Savings Plan.

No national retirees oregon employees volition beryllium affected, and the funds volition beryllium made full erstwhile the impasse ends, Yellen said successful the letter.

“I respectfully impulse Congress to enactment promptly to support the afloat religion and recognition of the United States,” she wrote.