The federal government will run out of cash in one month - Dr Boyce Watkins
Category: Entertainment
Duration: 00:24:04
Description:
Duration: 00:24:04
Description:
The U.S. could fail to meet its debt obligations sooner than expected, Treasury Secretary Janet Yellen warned in a letter to House Speaker Kevin McCarthy.
Yellen said a drop in tax receipts meant the U.S. could hit its debt ceiling as soon as June 1, earlier than Wall Street and Washington had estimated.
In light of the new, earlier estimate, President Joe Biden invited the “big four” congressional leaders to a May 9 meeting at the White House to discuss the debt limit.
The ongoing debt ceiling negotiations are undeniably critical to the global economy. As the world's largest economy, the United States plays a pivotal role in maintaining the stability and confidence of financial markets worldwide. The debt ceiling, which is the maximum amount of debt the US government can legally accumulate, is a vital tool that helps the US government manage its finances and prevent unsustainable debt accumulation.
However, the debt ceiling also poses a significant threat if it is not raised by the deadline. Failure to increase the debt limit can lead to dire consequences, not only for the United States but also for the global economy. As the US Treasury runs out of money to pay its bills, the risk of default becomes imminent. A default on US debt would shake the global financial system, as the US dollar and Treasury securities are considered the safest and most stable financial assets in the world. Confidence in these assets would plummet, leading to a cascade of negative effects, including increased borrowing costs, weakened currencies, and market turmoil.
Moreover, a failure to raise the debt ceiling could also exacerbate global economic uncertainty. Countries with close ties to the US economy may see their growth prospects deteriorate, and investors may retreat from riskier assets, seeking refuge in safe-havens. This flight to safety could trigger a slowdown in international trade, investment, and economic growth, potentially pushing the global economy towards a recession.
Dr Boyce Watkins is a Finance PhD and founder of The Black Business School. To learn more, please visit BoyceWatkins.com.
#Debtceiling #Financialcrisis #BlackWealth
Yellen said a drop in tax receipts meant the U.S. could hit its debt ceiling as soon as June 1, earlier than Wall Street and Washington had estimated.
In light of the new, earlier estimate, President Joe Biden invited the “big four” congressional leaders to a May 9 meeting at the White House to discuss the debt limit.
The ongoing debt ceiling negotiations are undeniably critical to the global economy. As the world's largest economy, the United States plays a pivotal role in maintaining the stability and confidence of financial markets worldwide. The debt ceiling, which is the maximum amount of debt the US government can legally accumulate, is a vital tool that helps the US government manage its finances and prevent unsustainable debt accumulation.
However, the debt ceiling also poses a significant threat if it is not raised by the deadline. Failure to increase the debt limit can lead to dire consequences, not only for the United States but also for the global economy. As the US Treasury runs out of money to pay its bills, the risk of default becomes imminent. A default on US debt would shake the global financial system, as the US dollar and Treasury securities are considered the safest and most stable financial assets in the world. Confidence in these assets would plummet, leading to a cascade of negative effects, including increased borrowing costs, weakened currencies, and market turmoil.
Moreover, a failure to raise the debt ceiling could also exacerbate global economic uncertainty. Countries with close ties to the US economy may see their growth prospects deteriorate, and investors may retreat from riskier assets, seeking refuge in safe-havens. This flight to safety could trigger a slowdown in international trade, investment, and economic growth, potentially pushing the global economy towards a recession.
Dr Boyce Watkins is a Finance PhD and founder of The Black Business School. To learn more, please visit BoyceWatkins.com.
#Debtceiling #Financialcrisis #BlackWealth
