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Janet Yellen, US Treasury Secretary, has appealed to Congress again to call on US lawmakers to raise the debt ceiling before the US plunges into a new financial crisis.
In Sunday's Wall Street Journal article, Yellen wrote that the US will run out of money and will not be able to pay its bills in October.
"We are finally coming out of the pandemic crisis. Let's not plunge into the financial crisis," she said.
She also explained that if the debt ceiling is not raised, it will lead to a huge economic catastrophe. In a matter of days, millions of Americans may find themselves without cash. There may be delays with important payments and the troops may be left without payment. More than 50 million older people may stop receiving Social Security checks. Children will be left without benefits. Yellen was outraged that America would not fulfill its obligations.
According to Janet Yellen, a default will cause a financial crisis, which can lead to a significant increase in interest rates and mass sell-offs on the stock market.
She reminded Congress that raising the debt limit does not mean additional costs, adding that it is important to raise the debt ceiling a little earlier than to be late.
It can be recalled that debt balancing in 2011 pushed America to the brink of a crisis. America's credit rating was downgraded and the stock market plummeted. This led to a failure in the financial market, which lasted for months. Time is money, potentially billions of dollars.
The US Treasury Secretary has been warning Congress all summer, reminding of the serious consequences if the $ 28 trillion national debt ceiling is not raised.
Democrats and Republicans are currently arguing about this. A vote is scheduled for next week in the US House of Representatives, with Senate Minority leader Mitch McConnell rejecting Yellen's calls for Republicans to cooperate with Democrats in raising the federal debt ceiling.
These comments by Yellen were made at a time when there was a sharp sell-off on the US stock market on Monday.
The Dow Jones Industrial index plummeted by 500 points:
S&P 500 declined by 1.5%:
Nasdaq Composite fell also by 1.8%:
Meanwhile, gold is rising by around 1%:
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