{"id":19991,"date":"2023-04-18T19:59:32","date_gmt":"2023-04-18T19:59:32","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/ecb-president-lagarde-warns-of-major-disaster-if-us-defaults-on-debt-obligations-economics-bitcoin-news\/"},"modified":"2023-04-18T19:59:32","modified_gmt":"2023-04-18T19:59:32","slug":"ecb-president-lagarde-warns-of-major-disaster-if-us-defaults-on-debt-obligations-economics-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/ecb-president-lagarde-warns-of-major-disaster-if-us-defaults-on-debt-obligations-economics-bitcoin-news\/","title":{"rendered":"ECB President Lagarde Warns of \u2018Major Disaster\u2019 If US Defaults on Debt Obligations \u2013 Economics Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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There is a lot of discussion lately about the U.S. government\u2019s debt ceiling and whether Congress will act before defaulting. In a recent interview, Christine Lagarde, the president of the European Central Bank (ECB), said she is confident the U.S. can maintain its debt obligations. However, she warned that if the U.S. were to default on its debts, it would be a \u201cmajor disaster.\u201d<\/strong><\/p>\n

Lagarde Confident in U.S. Debt Management Despite Predictions of Possible Default Crisis for Government in August or September<\/h2>\n

Although the United States of America is an economic superpower, it has accumulated more than $31 trillion in debt held by the government and intragovernmental holding entities. The debt has grown exponentially<\/a> over the last 20 years, and there has been much talk in recent times about the government defaulting on its interest and principal payments to foreign investors, foreign governments, and other entities. At the beginning of the year, the U.S. secretary of the Treasury, Janet Yellen, explained how the Treasury would need to enact \u201cextraordinary measures\u201d to pay its debts. However, she also warned<\/a> that the funds would be \u201cexhausted before early June.\u201d<\/p>\n

Unless Congress changes its approach, the U.S. government may be unable to pay interest and principal to specific lenders by summer. Yellen\u2019s extraordinary measures provided the U.S. with roughly $800 billion, and the government anticipates a substantial amount of funding from taxpayers, which is expected to last until June. Speaking with the hosts of CBS News\u2019 \u201cFace the Nation\u201d on Sunday, Christine Lagarde, the president of the ECB, discussed<\/a> the debt issues in the United States and expressed her confidence in the U.S. managing its finances.<\/p>\n

\u201cI have enormous confidence in the United States,\u201d Lagarde said. \u201cI simply cannot believe that they would allow such a major, major disaster to occur with the United States defaulting on its debt. It is not possible. I cannot believe it would happen. If it did, it would have a very negative impact not only in this country, where confidence would be challenged, but also around the world,\u201d Lagarde added. The ECB president continued:<\/p>\n

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Let\u2019s face it, this is the largest economy. It\u2019s a major leader in economic growth around the world. It cannot let that happen. I understand the politics, I\u2019ve been in politics myself. But there is a time when the higher interest of the nation has to prevail.<\/p>\n<\/blockquote>\n

Lagarde\u2019s remarks on CBS followed commentary from economist Paul Krugman<\/a>, who said there was a possibility of the U.S. defaulting on its debt. He stated<\/a> that he did not know when it would happen, but it would likely occur because of a Republican-controlled House of Representatives refusing to raise the debt ceiling. \u201cWho will trust the currency of a nation that appears to have politically lost its mind?\u201d Krugman asked in his most recent opinion editorial. \u201cIf that happens, the threat to the dollar\u2019s reserve-currency status will be the least of our problems.\u201d<\/p>\n

The ECB president raised the issue of the competition between the U.S. and China, which has been intensifying recently. Lagarde expressed her belief that healthy competition is beneficial and can bring about modernization. \u201cThere is undoubtedly a competition between these major economies,\u201d Lagarde stated. \u201cThe U.S. is the first economy in the world. China is clearly competing and is putting all forces into that competition. I think competition is healthy. It has to stimulate innovation. It has to stimulate productivity. But it\u2019s inevitable that these two large economies are facing each other.\u201d<\/p>\n

Despite Lagarde\u2019s optimism, there has been a lot of tension<\/a> between China and the U.S. recently. Tensions between the two countries heightened when Nancy Pelosi, the American representative from California, visited Taiwan<\/a> in August 2022. The head of the European Central Bank emphasized that the competition \u201cshould not be confrontational,\u201d and emphasized that \u201cconflict is not inevitable.\u201d While Lagarde is confident in the United States government\u2019s ability to manage its fiscal responsibilities, Politico reporters Jennifer Scholtes, Paula Friedrich, and Beatrice Jin state<\/a> that \u201cby all indications, the U.S. is most likely to approach the brink of default in August or September.\u201d<\/p>\n

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\nTags in this story
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brink of default<\/a>, Christine Lagarde<\/a>, competition<\/a>, conflict<\/a>, currency trust<\/a>, debt obligations<\/a>, dollar status<\/a>, economic superpower<\/a>, economics<\/a>, European Central Bank<\/a>, extraordinary measures<\/a>, Financial Markets<\/a>, financial stability<\/a>, fiscal responsibility<\/a>, foreign investors<\/a>, Global Economy<\/a>, government default<\/a>, House of Representatives<\/a>, Innovation<\/a>, Interest payments<\/a>, international relations<\/a>, intragovernmental holding entities<\/a>, Janet Yellen<\/a>, major disaster<\/a>, Nancy Pelosi<\/a>, Opinion Editorial<\/a>, Paul Krugman<\/a>, political risks<\/a>, Politico<\/a>, principal payments<\/a>, productivity<\/a>, Republicans<\/a>, reserve currency<\/a>, Taiwan<\/a>, taxpayers<\/a>, Tensions<\/a>, Treasury<\/a>, US Debt Ceiling<\/a>, us-china relations<\/a><\/div>\n<\/div>\n

What are your thoughts on Christine Lagarde\u2019s comments? Share your thoughts about this subject in the comments section below.<\/strong><\/em><\/p>\n

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\nJamie Redman <\/h6>\n

\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

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