United States Treasury Secretary Janet Yellen at the NYT DealBook Summit event, 2022. Screenshot from YouTube

US is heading for a financial ‘catastrophe’ US Treasury Secretary warns

On January 19, 2023, the United States hit its debt ceiling of $31.4 trillion. The country faces a recession if it defaults on its debt, the US Treasury Secretary warned in an interview. Her warning underscored the danger of printing money.

Published: January 30, 2023, 7:32 am

    Read more

    The country hit the $31.4 trillion debt limit Congress passed in 2021. The Republican lawmakers who control the House of Representatives said they would not raise the debt limit unless Democrats, who control the Senate, agreed to budget cuts. The US national debt is approximately 122 percent of the gross domestic product (GDP), meaning that the government owes more than the population produces.

    On Saturday, US Treasury Secretary Janet Yellen said the US could be facing dire consequences if it did not hike its statutory debt ceiling soon. A default on its debt by summer would lead to a financial crisis, Yellen warned.

    “It makes me nervous…It would be devastating. It’s a catastrophe,” Yellen told Axios news outlet, adding that “we’ll have a financial crisis and I believe we would have a recession in the United States.”

    “Spending would have to decline to match the tax revenues,” Yellen said. That in turn could cripple the ability of the government to support the economy with stimulus. Beyond that, the “psychological consequences” of people deciding to consume less could “further impact spending and deepen a recession.”

    According to the senior official, a US debt default would also send ripple-effects across the global economy. “Americans would face higher borrowing costs, and it would cause a good deal of turmoil globally as well,” Yellen said. But the real reason the Fed cannot allow interest rates to rise anywhere near where they would be in a free market is that it would cause the federal government’s interest payments to rise to unsustainable levels.

    Congress has been notified by the Treasury that emergency measures have been invoked to prevent the country from reaching the national debt ceiling. The measures largely involve temporarily suspending unnecessary payments in order to give the Congress time to negotiate and pass a debt limit hike, most likely until early June. Without the hike, default would be imminent, she warned.

    But the irresponsible money printing by the Federal Reserve has led many to believe that the government should not increase its credit limit without cutting social spending.

    US warning of a default

    “The president and the leadership of Congress are responsible to find a way to get the debt ceiling raised,” she told Axios.

    The debt ceiling prevents the US Treasury from issuing new government bonds to fund government expenditure. Exceeding the limit means that the federal government’s ability to make payments, including paying for various social expenditures, is at risk.

    The debt limit therefore caps the total amount of allowable outstanding US federal debt. It is unlikely Congress will pass meaningful entitlement reform, however.

    According to the Ron Paul Institute, a Republican spending plan “will likely continue increasing spending on the military-industrial complex while refusing to address the looming cost problems with Social Security and Medicare”.

    Even if some Republicans are willing to discuss reforms to Social Security and Medicare, most are still too afraid of the “senior lobby”.

    According to columnist Paul Craig Roberts, the current state of economic affairs has been the result of a “high level of incompetence that today rules Americans“.

    Roberts has argued that the Fed’s interest rate policy for example could raise, rather than lower, inflation.

    “Military spending is similar to welfare. The associated wages and salaries pump money into consumer demand, but there are no corresponding goods and services to absorb it. Consumers do not purchase tanks, missiles, fighter aircraft, and warships. The size of the US military budget makes it inflationary,” he pointed out.


    Consider donating to support our work

    Help us to produce more articles like this. FreeWestMedia is depending on donations from our readers to keep going. With your help, we expose the mainstream fake news agenda.

    Keep ​your language polite​. Readers from many different countries visit and contribute to Free West Media and we must therefore obey the rules in​,​ for example​, ​Germany. Illegal content will be deleted.

    If you have been approved to post comments without preview from FWM, you are responsible for violation​s​ of​ any​ law. This means that FWM may be forced to cooperate with authorities in a possible crime investigation.

    If your comments are subject to preview ​by FWM, please be patient. We continually review comments but depending on the time of day it can take up to several hours before your comment is reviewed.

    We reserve the right to del​ete​ comments that are offensive, contain slander or foul language, or are irrelevant to the discussion.


    Ohio disaster: When hedge funds manage rail traffic

    East PalestineAfter the derailment of a freight train loaded with highly toxic chemicals in the US state of Ohio, a devastating environmental catastrophe may now be imminent. The wagons burned for days, and a "controlled" explosion by the authorities released dangerous gases into the environment.

    US President Biden orders ‘spy’ balloon to be shot down

    WashingtonThe US President gave the order to shoot down China's "spy balloon". The balloon had caused US Secretary of State Blinken to cancel a trip to Beijing. In the meantime, a second balloon was sighted.

    Gun violence: More risk in Chicago and Philadelphia than Iraq, Afghanistan

    Providence, Rhode IslandA striking statistic: young Americans are several times more likely to be injured by a gun in cities like Chicago and Philadelphia than they are while serving as a soldier in a foreign country.

    Elon Musk, the first person in history to destroy $200 billion in a year

    Never before in human history has a person lost as much money in one year as Elon Musk did in 2022. The Tesla and Twitter boss lost $200 billion last year. However, with his remaining $137 billion, he is still the second richest person in the world.

    Extreme cold and winter storms sweep across US

    More than a million households without electricity, thousands of canceled flights, temperatures in the double-digit minus range and already 41 fatalities: The US is being overwhelmed by an enormous cold wave.

    Soros sponsors violent leftists and anti-police lobby as US crime surges

    WashingtonThe mega-speculator and "philanthropist" George Soros remains true to himself – he has been sponsoring anti-police left-wing groups with billions of dollars.

    FTX Founder Sam Bankman-Fried arrested after crypto billions go missing

    NassauHe is no longer sitting in his fancy penthouse, but in a cell in the Bahamas: Sam Bankman-Fried (30), founder of the crypto company FTX, is said to be responsible for the theft of 37 billion euros. An interesting fact is that media in the EU have so far kept this crime thriller almost completely secret.

    How Twitter helped Biden win the US presidency

    WashingtonThe short message service Twitter massively influenced the US presidential election campaign two years ago in favor of the then candidate Joe Biden. The then incumbent Donald Trump ultimately lost the election. Internal e-mails that the new owner, Elon Musk, has now published on the short message service show how censorship worked on Twitter. The 51-year-old called it the “Twitter files”.

    Alberta PM suspends cooperation with WEF

    EdmontonThe newly elected Premier Danielle Smith of the province of Alberta in Canada has recently made several powerful statements against the globalist foundation World Economic Forum and its leader Klaus Schwab. She has also decided to cancel a strange consulting agreement that WEF had with the state.

    AIPAC cheers US midterm results

    WashingtonThe American Israel Public Affairs Committee (AIPAC) expressed satisfaction with the US midterm election outcome. Republican voters, on the other hand, deplored their party's weak performance.

    Go to archive