Lawmaker Warns US Default Risks Dollar’s Reserve Currency Status, Exploitation by China and Russia

The apical Democrat connected the House Intelligence Committee has warned that China and Russia would question to exploit the chaos resulting from a U.S. default. He further cautioned that the U.S. dollar’s reserve currency presumption could beryllium eroded if the U.S. defaults connected its indebtedness obligations.

U.S. Lawmaker’s Debt Default Warning

Congressman Jim Himes (D-CT), the ranking Democrat connected the House Intelligence Committee, warned Sunday during an quality connected CNN’s “State of the Union” astir the risks of the U.S. defaulting connected its indebtedness obligations.

The lawmaker was asked whether the existent U.S. “debt crisis” is “a nationalist information threat” and whether immoderate satellite leaders person expressed interest to him astir it. Avril Haines, Director of National Intelligence, informed the Senate past week that Russia and China would effort to exploit the chaos resulting from a U.S. default to amusement that “We’re not susceptible of functioning arsenic a democracy.”

Himes replied, “It has not travel up successful the meetings that we had successful Jordan and Israel and Egypt,” emphasizing:

But, of course, the Russians and the Chinese would question to exploit it. The United States has ne'er truly travel adjacent to defaulting connected its indebtedness before. So it’s hard for america to ideate what that mightiness look like. But, of course, it could beryllium catastrophic.

“Frankly, the afloat religion and recognition of the United States is the bedrock connected which the planetary fiscal strategy is built,” helium noted.

The congressman stressed that if the U.S. indebtedness default comes into question, “all kinds of things could happen.” He warned:

The U.S. dollar could … its presumption arsenic the planetary reserve currency could beryllium eroded. People whitethorn take to put successful the United Kingdom oregon successful the European Union, alternatively than the United States.

U.S. Treasury Secretary Janet Yellen said past week that the Treasury whitethorn not beryllium capable to wage each of the government’s bills arsenic early arsenic June 1 “if Congress does not rise oregon suspend the indebtedness bounds earlier that time.”

On Sunday, Yellen besides warned connected ABC’s “This Week” that if Congress fails to enactment connected the indebtedness ceiling, it could pb to a “constitutional crisis” with implications for fiscal markets and involvement rates. Additionally, she cautioned that not raising the indebtedness ceiling would effect successful a “steep economical downturn” successful the U.S. The Treasury Secretary said:

There is nary mode to support our fiscal strategy and our system different than Congress doing its occupation and raising the indebtedness ceiling and enabling america to wage our bills. And we should not get to the constituent wherever we request to see whether the president tin spell connected issuing debt. This would beryllium a law crisis.

Do you deliberation Russia and China volition instrumentality vantage of the chaos if the U.S. defaults connected its indebtedness obligations? Let america cognize successful the comments conception below.

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