12.10.202103:30 Forex Analysis & Reviews: Janet Yellen considers the US debt limit a "constant threat to the economy"

Well, the issue of the US national debt has been resolved. It would be more accurate to say "resolved for the next couple of months." The fact is that the US Senate decided to raise the debt limit by $ 480 billion, which is not enough to breathe freely for the next year or two. Recall that for the entire period of the life of the law on the limit of government borrowing, it has increased about a hundred times. Approximately once a year. Accordingly, each time the problem with the limit occurs about once a year. Now, US lawmakers have not been able to come to a common opinion. Recall that initially, it seemed that there would be no problems with the increase since the Democrats have the necessary majority in both chambers of Congress. However, as it turned out later, it takes more votes in the Senate than 50% to raise the debt limit. However, there was no particular problem here either, since, at any moment, the Democrats could apply a special procedure called "filibuster cancellation," which would allow them to pass this bill by a simple majority. However, it still hasn't come to that, and so far, the limit has been raised temporarily and for a limited amount.

At the same time, US Treasury Secretary Janet Yellen called the very existence of the concept of "public debt limit" a constant threat to the American economy. According to her, every time there is a need to raise the limit (there are simply no other options in this matter, otherwise the government will not be able to finance state institutions and pay its debts and interest on these debts, and then default), politicians are "playing with fire" and cannot quickly and agree. According to Yellen, negotiations to increase the limit turn into political games, where each of the parties tries to bargain for the best terms of the deal. "A delay that calls into question the government's ability to meet its obligations is likely to cause irreparable damage to the US economy and global financial markets," the Treasury secretary told Congress. She once again noted that every decision on this issue "in the last 5 minutes" could undermine the confidence of the whole world in the dollar as a reserve currency and lead to the collapse of the American economy.

However, new negotiations will begin between Democrats and Republicans in the near future on a full-fledged agreement to increase the maximum amount of borrowing. It is also reported that 11 Republican senators, in particular, voted for a short-term increase in the limit. Representatives of the Republican Party itself have already called this event a "shot in the foot" since for a long time they stated that they would not allow Joe Biden to raise the "ceiling" of the national debt so that he could finance his "infrastructure" package worth from 3.5 to 5 trillion dollars.