US Default Threat: After the International Monetary Fund, now America’s Finance Minister Janet Yellen herself has warned about America’s debt default. He said that if America defaults, crores of Americans may be in trouble due to this. People may have to face the crisis of salary. Due to this there may be a recession due to which people may lose their jobs and then the business may come to a standstill.
Addressing the community bankers, Janet Yellen said that the country is standing on the cusp of an unprecedented economic and financial crisis. He said that due to this crisis, government work may come to a standstill. Disruption can arise from air traffic control to law and order, border security, national security and telecommunication systems.
Earlier, the IMF had also said that if the US defaults in repaying its debt, then it will affect not only America but the entire global economy may have to bear the brunt of it. IMF’s Communications Director Julie Kojack appealed to all parties to find a solution as soon as possible.
In America, Republicans and Democrats are divided on the level of debt. Republicans in the US Congress demand that the President Joe Biden administration agree to cut the budget in lieu of increasing the debt limit. If this does not happen, the debt crisis on America can deepen. Democrats want the debt limit to be increased. Democrats are accusing Republicans of furthering their political agenda.
The IMF cautioned that borrowing on default would be costly, as well as global instability and other economic effects could also be seen. In such a situation, any possibility of US defaulting should be avoided.