Why The World Is On The Precipice Of A Worldwide Economic Meltdown

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The President, global banks, and the US Treasury are warning that Washington risks initiating a worldwide financial crisis if politicians do not raise the debt limit soon.

The time for disaster is now; the US has already reached its debt limit of $31.4 trillion, and desperate measures have been taken to buy more precious time.

The unbelievable possibility of a US default as soon as next month looms ever closer on the horizon, with America’s huge public debt reaching an overwhelming size equivalent to 120 per cent of GDP – prompting panicked reactions from Washington in hopes that fiscal armageddon can be avoided.

President Joe Biden is committed to engaging with Republican House Speaker Kevin McCarthy in a discussion on raising the US debt ceiling as America approaches default. Any deal between them will be contingent upon significant conditions, and this stand-off has only just begun. 

JPMorgan Chase CEO Jamie Dimon expressed alarm that if they fail to raise the limit, it could have devastating implications.

We should never question the creditworthiness of the United States government. That is sacrosanct, and it should never happen,” Mr Dimon said.

Of course, Democrats can blame Republicans, and the Republicans can blame the Democrats. I don’t care who blames who — even questioning it is wrong,” Mr Dimon added.

That is part of the financial structure of the world. This is not something we should be playing games with at all. Americans should understand that the American financial system is the crux of the world’s financial system, and we shouldn’t play with it.” Mr Dimon further stated.

This week Congress faced a standstill, raising the danger of an unprecedented and potentially disastrous US debt default unless Democratic and Republican leaders can reach a consensus. Treasury Secretary Janet Yellen notified Congressman McCarthy that her department had implemented “extraordinary measures” to retain government operations until June 5th – averting a crisis for now.

I respectfully urge Congress to act promptly to protect the full faith and credit of the United States,” Janet wrote in the notice.

With a similar stance to Mr Dimon, Dr Yellen wrote in her letter last week that any default on the US debt would inflict “irreparable harm” to America’s economy, citizens, and international financial security. Despite Republicans having a slight majority in the House, they are still rejecting passing an increase of the debt ceiling without cutbacks to spending.

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