There has been much discussion recently about the U.S. government debt ceiling and whether Congress will take action before default occurs. In a recent interview, European Central Bank (ECB) President Christine Lagarde said she is confident that the U.S. can sustain its debt. However,There has been much discussion recently about the U.S. government debt ceiling and whether Congress will take action before default occurs. In a recent interview, European Central Bank (ECB) President Christine Lagarde said she is confident that the U.S. can sustain its debt. However, she warned of a “catastrophe” if the U.S. defaults on its debt. she warned of a “catastrophe” if the U.S. defaults on its debt.
Lagarde predicts a possible goLagarde predicts a possible government default crisis in August or September, but is confidentvernment default crisis in August or September, but is confident
in U.S. debt management.in U.S. debt management.
The United States, despite being an economic powerhouse, has accumulated more than $31 trillion in debt held by the government and intragoveThe United States, despite being an economic powerhouse, has accumulated more than $31 trillion in debt held by the government and intragovernmental holding entities. This debt has increased exponentiallyrnmental holding entities. This debt has increased exponentiallyover the past two decades and has recently been the subject of government defaults on interest and principal payments to foreign investors, foreign governments, and others. At the beginning of the year, U.S. Treasury Secretary Yellen explained that the Treasury needed to take “extraordinary measures” to pay the debt. Bover the past two decades and has recently been the subject of government defaults on interest and principal payments to foreign investors, foreign governments, and others. At the beginning of the year, U.S. Treasury Secretary Yellen explained that the Treasury needed to take “extraordinary measures” to pay the debt. But she also warned that funds would be “depleted by early June.”ut she also warned that funds would be “depleted by early June.”
Unless Congress changes its ways, the U.S. government may be unable to pay interest and principal to certain financial institutions by summer. Chair Yellen’s extraordinary measure would provide the U.S. with roughly $800 billion, which the government expects to last through June, raising a substantial amount of money from taxpayers. Speaking with the hosts of CBS NeUnless Congress changes its ways, the U.S. government may be unable to pay interest and principal to certain financial institutions by summer. Chair Yellen’s extraordinary measure would provide the U.S. with roughly $800 billion, which the government expects to last through June, raising a substantial amount of money from taxpayers. Speaking with the hosts of CBS News’ “Face the Nation” on Sunday, ECB President Christine Lagardews’ “Face the Nation” on Sunday, ECB President Christine Lagardediscussed the US debt problemdiscussed the US debt problemand expressed confidence that the US is managing its finances.and expressed confidence that the US is managing its finances.
Lagarde said, “I have tremendous confidence in the United States.” I simply cannot believe that the U.S. would allow a major, major disaster to occur that would cause the U.S. to default on its debt. It is impossible. I cannot believe that such a thing could happen. If it did, it would have a very negative impact, not only on this country, where confidence would be damaged, butLagarde said, “I have tremendous confidence in the United States.” I simply cannot believe that the U.S. would allow a major, major disaster to occur that would cause the U.S. to default on its debt. It is impossible. I cannot believe that such a thing could happen. If it did, it would have a very negative impact, not only on this country, where confidence would be damaged, but on the whole world,” Lagarde added.The ECB president continued: on the whole world,” Lagarde added.The ECB president continued:
To be honest, this is the largest economic area. It leads the world in economic growth. We cannot afford to let this happen. I have been in politics, so I understand the politics. But there are tiTo be honest, this is the largest economic area. It leads the world in economic growth. We cannot afford to let this happen. I have been in politics, so I understand the politics. But there are times when the higher interests of the state must take precedence.mes when the higher interests of the state must take precedence.
Lagarde’s remarks on CBS follow commentary by economist Paul Krugman that the United States could default on its debt. Krugman said he does not know when it will happen, but it is likely to happen because the Republican-controlled House of Representatives has refused to raise the debt ceiling. Lagarde’s remarks on CBS follow commentary by economist Paul Krugman that the United States could default on its debt. Krugman said he does not know when it will happen, but it is likely to happen because the Republican-controlled House of Representatives has refused to raise the debt ceiling. ‘Who would trust the currency of a politically unstable country?’Who would trust the currency of a politically unstable country?
