U.S. Secretary of the Treasury Janet Yellen published a letter on May 22 warning of a debt default within as little as ten days.
Inability to pay bills
Yellen wrote in a letter to U.S. Congress:
“… It is highly likely that Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1.”
Yellen noted that she previously said it was impossible to provide an exact date for the Treasury’s possible failure to pay government bills. She now says that the Treasury has taken additional information into account for its projection.
Though Yellen did not use the word “default,” failure to meet the government debt obligations is generally considered to be a default.
Resolution to debt ceiling negotiations needed
Yellen urged Congress to act to resolve the issue of the debt limit. Currently, President Joe Biden and congressional leaders are attempting to negotiate spending cuts that could raise the debt ceiling and prevent a default — with the Biden administration favoring the elimination of tax loopholes that in part apply to large crypto investors.
Yellen indirectly addressed those negotiations by noting that a last-minute solution could do damage to the economy at the consumer, business, and government levels.
Some crypto investors, however, are optimistic about the prospects of a U.S. default, as a downturn in the mainstream economy could attract interest in crypto.
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