“US Economy Threatened with Default on Debt, Warns Treasury Secretary Yellen”

Jakarta –

The superpower of the United States of America (US) is threatened with default or default on debt. This was announced by US Treasury Secretary Janet Yellen.

If default does occur, then this will be disastrous for the US economy. There will be a lot of unemployment, high interest rates so that credit installments will soar.

Quoted from Reuters, Yellen in a speech said that if there was a default or default on US debt, it would trigger unemployment, mortgage repayments would be more expensive, car loan repayments and credit cards would be bigger.

According to him, if a default occurs, the US economy will be threatened. “Our failure will be an economic and financial disaster. It will raise the cost of credit forever, future investments will be more expensive,” he said as quoted by Reuters, Wednesday (26/4/2023).

If the US fails to pay, it will result in the government being unable to pay the main military and social security guarantees, and even layoffs (PHK) for government officials.

Then people are also worried that they will default on home, car, credit card loans and make the US credit market worse.

Then from the side of high interest rates, this will cause problems for the stock market. In the past year high interest rates have weighed heavily on the stock market.

Yellen said this failure would create an economic and financial disaster for the country. But this can be prevented. “Congress must choose to increase or suspend the debt ceiling and must do so unconditionally and not until the last minute,” he said.

Yellen explained to lawmakers that in January the US government could only afford to pay until early July.

Indeed, unlike other developed countries, the US limits the amount that can be borrowed. Because the government spends more than necessary, lawmakers must therefore raise the debt ceiling periodically.

House of Representatives chairman Kevin McCharty said his party plans to cut spending by US$ 4.5 trillion with an increase in the debt limit of US$ 1.5 trillion. He said this was the basis for negotiations in the coming weeks.

The condition of the financial market in the US is still filled with worries regarding the state debt. Especially the fear of default, because the risk is getting higher.

(kil/dna)