America’s risk of defaulterImage Credit source: AFP
America is seen as the economic superpower of the world. But these days the biggest economy of the world is also at risk. America is in danger of becoming a defaulter. This is why the President of the United States Joe Biden We are constantly engaged in dealing with this danger. President Biden and Republican House Speaker Kevin McCarthy held a meeting. In this meeting, discussion was held to increase the ‘debt ceiling’.
If we understand the meaning of ‘debt ceiling’ in simple language, then it is the spending limit set by the US Congress. Through this, it is decided that how much money the government can borrow. Debt ceiling is not applicable for future expenses. Borrowing limits refer to payments that have to be made immediately. Usually these expenses include expenses like salary and pension of government servants. The total economy of America is 23 trillion dollars.
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hope to reach an agreement
After meeting with President Biden, McCarthy said, ‘I am confident that we can fix a deal.’ However, no agreement could be found in his meeting with President Biden. McCarthy said, ‘We have not been able to reach any agreement yet. But I think the talks have been successful on those issues on which there were differences between us. Biden and I will talk to each other every day until an agreement is reached.
Biden issued a statement saying, ‘I just had a meeting with Speaker McCarthy about the need to prevent default and save our economy from devastation. This meeting has been very productive. We reiterate once again that default is avoidable. The only way forward in this regard is to have faith in a bipartisan agreement.
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What if America defaults?
Goldman Sachs has predicted that if the US does not end its debt crisis, it will run out of cash in the coming three weeks. The investment bank says that by June 8 or 9, the cash with the Treasury Department will fall to $30 billion. This cash is very less to meet the needs of the world’s largest economy.
Investment bank economists Alec Phillips and Tim Krupa have warned that given the current situation, it could happen that by June 1 or 2, the Treasury could run out of cash. If this happens then America will default. America’s default means that recession will come. Its effect will be seen on the economies of the world.