To say there would be “shockwaves” if the U.S. defaults on its debts next year is like saying there would be great damage if a meteor the size of Madagascar hit the Earth. This nation and world itself is not in any condition to handle the repercussions of such an event and it seems like the UniParty Swamp is in favor of such a catastrophe.
There is hope. Between Republican control of both chambers of Congress and President Donald J. Trump reentering the Oval Office in three weeks, it’s not time to panic. But there needs to be real actions taken to not only raise the debt ceiling but to dramatically cut spending. Unfortunately, the latter may not be in the cards.
The United States is on a collision course with a potential default on its national debt, an event poised to significantly undermine its credit rating and unleash economic turmoil across global markets. This looming crisis is centered around the contentious issue of the debt ceiling, sparking widespread concern among investors, policymakers, and international allies.
The federal debt limit, due to be reinstated on January 1, 2025, sets the stage for a critical financial challenge. With the Treasury Department’s extraordinary measures expected to deplete by mid-2025, there’s an urgent call for Congressional action to either raise or suspend the ceiling to avoid default. Treasury Secretary Janet Yellen has highlighted the gravity of the situation, urging lawmakers to protect the full faith and credit of the United States.
A default would not only question the reliability of U.S. Treasuries, traditionally seen as the bedrock of international finance with zero credit risk, but also lead to a potential sell-off of U.S. securities. Such an event could increase borrowing costs globally and might even push the U.S. into a recession, affecting millions of jobs and household wealth.
This is the path through which de-dollarization can ascend. BRICS nations have diligently been working to usurp the U.S. Dollar with their own currencies. Meanwhile, non-BRICS nations who have relied on the U.S. Dollar are seeking cover. This is why alternative forms of value such as cryptocurrency and precious metals are becoming increasingly popular.
Historically, the U.S. has faced similar scenarios, like in 2011 when political brinkmanship led to a downgrade of the U.S. credit rating by Standard & Poor’s. Although the situation was resolved before reaching default, the mere threat caused economic ripples. The implications of a 2025 default could be far more severe, with Moody’s already signaling a negative outlook on U.S. debt amidst rising deficits and interest rates.
The global economy’s reliance on U.S. economic stability means that any default would have far-reaching effects. Countries with economies tied to the U.S. dollar could see their own financial systems destabilized, and the trust in U.S. financial instruments could wane, leading to a reevaluation of global investment and trade strategies.
In response, some experts advocate for structural reforms to manage U.S. debt more sustainably, while others emphasize the need for immediate, bipartisan action in Congress to avert the crisis. The situation underscores the delicate balance between fiscal policy, political will, and economic stability, highlighting the stakes involved not just for America but for the world’s financial landscape.
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Article generated from corporate media reports.
