In a critical development, Treasury Secretary Janet Yellen has announced that the United States will hit its debt limit on Tuesday, January 21st. This announcement has sent ripples through financial markets and political corridors alike. Yellen has advised the US Treasury to begin taking “extraordinary measures” to prevent the nation from defaulting on its obligations. These measures include suspending investments in federal retirement funds and other accounting maneuvers to free up borrowing capacity.
Adding to the drama, Janet Yellen has officially closed the door on her tenure as Treasury Secretary. Unfortunately, her departure comes amidst record-breaking price hikes and economic turbulence that Americans won’t forget anytime soon. Her legacy is marked by significant economic challenges, including inflation that has opened everyone else’s wallets.
The impact of hitting the debt limit is substantial. In 2021, similar actions had a more significant effect on risk assets than even quantitative easing (QE). This has prompted strong reactions, including from financial commentator Peter Schiff, who remarked, “Janet Yellen announced that the U.S. has hit the debt limit. That means that unless the debt limit is raised, Congress has no choice but to eliminate trillions in spending. That’s great news. If #Trump really wants to cut spending and balance the budget, this is his best chance.”
As the Treasury’s cash drain begins, the duration of these measures remains uncertain. Yellen has urged Congress to act promptly to protect the full faith and credit of the United States. The urgency of the situation cannot be overstated, with potential economic ramifications that could affect markets, investments, and the daily lives of Americans.
Sources:
https://www.usatoday.com/story/news/politics/2025/01/17/us-debt-limit-what-happens-next/77784585007/
https://files.gao.gov/reports/GAO-25-107089/index.html
Sources:
https://www.usatoday.com/story/news/politics/2025/01/17/us-debt-limit-what-happens-next/77784585007/
https://files.gao.gov/reports/GAO-25-107089/index.html
https://x.com/KobeissiLetter/status/1880396242863419605
https://x.com/zerohedge/status/1880368847087341858
https://x.com/PeterSchiff/status/1880379369589453067
https://x.com/MarioNawfal/status/1880386673034355179
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