U.S. Treasury Secretary Scott Bessen warned today that the United States could face a Treasury default as early as in the latter half of this summer.
He said, "If the debt ceiling issue is not resolved, it could become the biggest crisis since 2008-2009."
The U.S. Treasury problem has been long-standing, with years of fiscal deficits and accumulated debt causing the scale of U.S. Treasury bonds to continuously rise. The debt ceiling is like a "tightening spell" that restricts the borrowing scale of the U.S. government. When the debt ceiling is reached but cannot be raised, the government may face difficulties in repaying the principal and interest of Treasury bonds on time.
Once the United States really experiences a Treasury default, the impact will be global. U.S. Treasury bonds occupy an important position in the global financial market and are an important asset allocation for many investors and financial institutions. A default would damage the credit of U.S. Treasury bonds, triggering severe turbulence in the global financial market, with possible sharp declines in prices of various assets such as stocks and bonds, and investor confidence severely damaged. Moreover, as the largest economy in the world, economic fluctuations in the United States will inevitably be transmitted to other countries through trade and investment channels, seriously obstructing the process of global economic recovery.
Source: https://www.toutiao.com/article/1834697175150984/
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