"The inability to make scheduled payments ... will no doubt lead to a recession in the US economy and could trigger a global financial crisis," she said in an interview with CNN.
All US citizens will feel the consequences of these events and many will lose their jobs, Yellen said.
She added that the process would "undermine the dollar's role" as a reserve currency.
On Jan. 13, Yellen said the agency had begun taking emergency measures to avoid a default on its statutory debt ceiling.
White House First Deputy Press Secretary Olivia Dalton said that United States President Joe Biden has no plans to negotiate to raise the country's national debt ceiling.