![]() As then, a Democrat is in the White House contending with a House that Republicans had won control of in the midterm elections. How the two parties came to this point looks remarkably similar to 2011. Yellen has said the government could run out of money as early as June 1. The Republican-majority House, on party lines, passed legislation last month that would amount to a nearly 14% cut in federal spending, adding stringent requirements on social programs and unraveling some of Biden’s climate measures.īiden has insisted that Congress needs to just raise or waive the debt limit, authorizing spending that was already approved by lawmakers, which for decades had been a routine matter. But neither side has budged from its starting position. President Biden and House Speaker Kevin McCarthy (R-Bakersfield) met on Tuesday and planned to meet again, giving people at least a modicum of hope that a deal may still be possible. I think we have another week” before stocks turn more volatile, said Chris Rupkey, chief economist at FwdBonds, a financial markets research firm in New York. “At the moment everyone is just frozen in place. Thus far, aside from rattling short-term bond markets, investors in U.S. In 2011 - to date the closest the nation came to defaulting - stocks plunged nearly 20% as the crisis deepened. So far, a default has been unthinkable and reason enough to expect a rerun of prior debt-ceiling battles. That’s why economists and other experts warn that a default would be catastrophic. Treasury pays low interest rates when it borrows money to cover deficit spending. ![]() Perhaps most important, it means the U.S. ![]() Being the reserve currency carries huge benefits for the United States. That means it’s the currency that all other countries trust to remain rock solid. In the global economy, in which the United States imports much more than it sells abroad, the dollar is known as the world’s reserve currency. That kind of inflation takes decades, not months or years, to bring down. ![]()
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