Yellen says US default should be unthinkable

Treasury Secretary Janet Yellen said the idea of ​​US lawmakers letting the country default on its debt should be “unthinkable”.

Speaking to reporters ahead of the G-7 finance ministers and central bank governors meetings in Niigata, Japan, Yellen said she was aware of Suggestion by former President Donald Trump for Republican lawmakers to let the nation default.

“The idea of ​​defaulting on our debt is something that would undermine the US and global economy so badly that I think everyone should consider it unthinkable,” she told reporters. “America should never default.”

Asked what action the Biden administration might take in the wake of a default, Yellen stressed that lawmakers need to raise the debt ceiling.

“There is no good alternative that will save us from disaster. I don’t want to rank which bad alternative is better than others, but the only reasonable thing is to raise the debt ceiling and avoid the terrible consequences that will ensue,” she told reporters, noting that the default can be avoided.

“There is no good reason to generate a good crisis of our own making. The US Congress has raised or suspended the debt ceiling nearly 80 times since 1960. I urge it to act quickly to do so once more,” she said.

Yellen’s comments come after she warned of an “economic disaster” if the United States fails to raise its debt ceiling in the coming weeks. She has also previously warned that the United States may not meet its debt obligations sooner than expected – and that it could run out of action as early as June 1.

Media quoted a Treasury official last week as saying her trip to Japan would be cut short to ensure she could continue to participate in efforts to resolve the debt ceiling issue.

She told reporters on Thursday: “Another meeting is scheduled for next Friday and the staff are working to see if they can resolve this, so I’m hopeful the differences can be bridged and the debt ceiling raised. “.