US Treasury Secretary Yellen Issued a Warning on US Debt Default

US Treasury Secretary Yellen Issued a Warning on US Debt Default

  • Janet Yellen’s efforts to stop US debt default.
  • The government is taking several measures to rectify this financial debacle.

US treasury secretary Janet Yellen wrote an urgent letter to Kevin McCarthy citing her grievances about US debt repayment. In that letter, she claimed that if the debt limit is not raised within June 1, it could result in a defaulter. According to all the available data, the US treasury would need more money to support all bills out of the house. Even though Yellen was the one to have claimed June 1 as the deadline, she later pushed back the date to June 5. This might have resulted in a breathing space for Congress, but it shouldn’t delay the urgency of the matter.

US Treasury Secretary Yellen Issued a Warning on US Debt Default

The Potential Impact of US Debt Default

While in a meeting of G7 finance ministers at Niigata, Japan, Yellen made several eye-opening statements regarding her recent claims. She stated that the US could be heavily impacted and lose all the gains accumulated post-pandemic era. 

Moreover, the impact of the US as one of the global economic leaders could also face many questions regarding their ability. Even the funding for the military in the US could face a halt due to the unfolding of such events. In contrast, everyone in the country worries about the US debt default. 

Surprisingly, crypto investors are interested in something other than such events but optimistic about it. An impact on US debt defaults and treasury funds can redirect people’s interest toward cryptocurrencies. 

Thus, the Biden administration is figuring out several ways to control this debt trap which the whole country could get snuck in. One of the first steps the Biden administration has chosen is to eliminate the tax loopholes that large institutional crypto investors are exploiting. 

All of these methods could do their work and stop the US from facing a debt default. But looking from a long-term perspective, this might not be enough to curb the rising debt issue in the country. 

US Treasury Secretary Yellen Issued a Warning on US Debt Default

US Government Efforts to Stop Debt Default

Despite this fact, Yellen urged the government to raise the debt ceiling if it didn’t want the country to face a debt default. However, everything would depend on bipartisan support as any bill which needs to be passed must go through the House and Senate. Now, in the US, Republicans control the House while Democrats the Senate. Therefore, a compromise must be reached if something is to happen. 

The government needs at least to extend its borrowing authority for the next two years. Suppose they want to save themselves from going through a debt defaulter. This will result in an acceleration of recession while financial markets become extremely volatile. And inflation would reach sky levels if this situation goes out of hand. 


The US has continued to lead from the front regarding economic matters. However, now that their country faces debt defaults, it is time for them to act immediately, as anything that happens to them causes widespread panic across the global markets. And people would start raising questions regarding their global leadership capabilities