On Sunday, US Treasury Secretary Janet Yellen petitioned for Congress to raise the debt ceiling to avoid a “historic financial crisis.” DXY up +0.08%, EUR USD down -0.10%
- Yellen indicates that the United States has always raised the debt ceiling before its limit.
- Default could cause a spike in interest rates, a decline in stock prices, and other financial crises.
- The debt ceiling, which only the US congress can raise, came back into effect on August 1 after it had been suspended for two years. It prohibits the US from borrowing over the $28.4 trillion limit if not raised.
- Last week, the Treasury Department stated that the United States was scheduled to run out of money later in October.
- In her editorial, Yellen suggested a list of potential financial catastrophes that could hurt the country if it did not raise the debt limit and could not meet its existing financial deadlines.
- Yellen explained that the US would emerge from this crisis as a permanently weaker nation. The Obama-era debt debate impasse saw the country come closest-ever to default.