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Yellen Warns of Possible US Default by June 1; Goldman Sachs Sets ‘Real Deadline’ a Week Later

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US Treasury Secretary Janet Yellen warns of possible debt default by June 1, emphasizing it as a firm deadline. Goldman Sachs, a global investment bank, estimates a “real deadline” for potential US default around June 8-9.

US Treasury Secretary Janet Yellen expressed her concerns again about the potential for a US default during an interview on NBC’s “Meet the Press” on Sunday. When asked about the June 1 deadline for a possible default, she responded by saying:

In my recent letter to Congress, I mentioned that we anticipate not being able to pay all of our bills starting in early June, potentially as early as June 1. I will keep Congress informed, but my assessment remains the same. So, I believe June 1 is a strict deadline.

When questioned about the possibility of the U.S. government reaching June 15 without breaching the debt ceiling, Treasury Secretary Yellen acknowledged that there is uncertainty regarding tax payments and spending. She expressed her belief that the chances of successfully paying all the bills by June 15 are very slim.

Regarding the potential actions President Joe Biden could take to address the debt ceiling problem in Congress, Yellen commented on the discussions around the 14th Amendment. She noted that using the 14th Amendment in this situation is unlikely due to legal uncertainties and the limited time available. Yellen expressed her sincere hope that Congress will raise the debt ceiling.

Yellen stated that if the debt ceiling is not increased, difficult decisions will need to be made about which bills will not be paid.

Also Read This Related: Paul Krugman: Financial Markets at Risk Without US Dollar

Goldman Sachs, a global investment bank, predicts that the U.S. may fail to meet its debt obligations about a week after June 1. Alec Phillips, the chief political economist at Goldman Sachs, mentioned in an interview that Congress needs to act soon and should not wait until the last minute. While they believe there might be some extra time, it is still important to take action promptly.

According to the economist from Goldman Sachs, they estimate that the actual deadline, when the risk is highest, is likely around June 8th or 9th.

The Congressional Budget Office (CBO) has warned that there is a big chance of the U.S. defaulting during the initial two weeks of June.

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Numerous individuals have raised concerns about the potential catastrophic effects of a U.S. default on its debt. The leaders of 146 prominent American companies have urgently appealed to President Biden and congressional leaders to take swift action in order to avoid a U.S. default, emphasizing the possibility of severe consequences. Furthermore, some experts believe that a U.S. default could jeopardize the status of the dollar as a reserve currency.

Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.

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