Latin America Digest March 11, 2023.
The US Treasury Secretary warns of the country’s “economic and financial collapse” due to non-payment of its public debts.
“In my opinion, and that of economists in general, failure to pay our debts would unleash an economic and financial catastrophe.”Janet Yellen warned Friday at a hearing before the Ways and Means Committee, the key tax-drafting committee in the US House of Representatives.
Yellen said failure to raise the federal government’s $31.4 trillion debt limit would threaten the country’s economic progress and urged that the federal debt ceiling be raised without conditions.
“I call on all members of Congress to join in addressing the debt limit without conditions and without waiting until the last minute,” he stressed.
Asked whether US debt payments could take precedence over the allocation of available cash resources, as some Republicans have suggested, Yellen said, “It’s not a solution to the debt ceiling problem.”
“Prioritizing is simply not paying all the government bills when they are due. This is something we haven’t done since 1789. And that’s just bad debt under another name.”
According to the senior US official, the only option to avoid a crushing increase in interest rates after a default is for the US to commit to paying its bills on time.
“If we don’t do that and think there are some short cuts to avoid economic chaos, we are deluding ourselves, because failure to pay the government bills will lead to economic and financial collapse.”he commented.
This, while some Republicans demanded concessions from President Joe Biden in return for raising the debt ceiling.
China, as the largest creditor of the United States, has criticized Washington for its “catastrophic debt problem” and demanded that this country adopt the most responsible monetary policies to avoid delaying the payment of its debts.
In this way, it deplored that the Treasury Department had begun to take extraordinary measures to meet its obligations after the US government had reached its debt limit.