Yellen warned that US government debt default will cause widespread "economic disaster"

　　Yellen warned that US government debt default will cause widespread "economic disaster"

　　Xinhua News Agency, Washington, September 19 (Reporter Gao Pan Xuyuan) U.S. Treasury Secretary Yellen warned on the 19th that if the U.S. Congress does not quickly raise the federal government debt ceiling or suspend its effectiveness, the federal government may default on debt in October this year. Will cause widespread "economic disaster".

　　Yellen said in an article published on the website of the Wall Street Journal that day that if Congress does not raise the debt ceiling or suspend its effectiveness, the cash balance of the U.S. Treasury Department will fall to an insufficient level in October, and the federal government will be unable to pay the bills. The United States will default on debt.

Economists and Treasury officials of the Democratic and Republican parties have formed an overwhelming consensus on this, believing that this will cause widespread "economic disaster."

　　Yellen warned that the US government debt default is likely to trigger a "historical financial crisis" and exacerbate the economic damage caused by the new crown epidemic; debt defaults may also trigger a surge in interest rates, a sharp drop in stock prices and other financial turmoil.

In addition, the current US economic recovery may be reversed into a recession, losing billions of dollars in economic growth and millions of jobs.

　　The debt ceiling is the maximum amount of debt set by the US Congress for the federal government to meet the payment obligations that have been incurred. Reaching this "red line" means that the US Treasury Department has exhausted its borrowing authorization.

According to the cross-party budget bill passed by the U.S. Congress in 2019, the federal government’s debt ceiling was reinstated on August 1 this year after a two-year suspension.