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

The top Democrat on the House Intelligence Committee has warned that China and Russia will seek to exploit the chaos created by a US default. He also warned that the reserve currency status of the US dollar could erode if the US defaults on its debt obligations.

Warning the US legislator against debt default

Congressman Jim Himes (D-CT), the ranking Democrat on the House Intelligence Committee, warned Sunday during an appearance on CNN’s “State of the Union” about the risks of a US default on its debt obligations.

The deputy was asked whether the current US “debt crisis” constitutes a “threat to national security” and whether any world leaders have expressed concern to him about it. Avril Haines, the director of national intelligence, told the Senate last week that Russia and China would try to exploit the chaos created by the US’s failure to show that “we’re not capable of functioning as a democracy.”

Hymes replied, “The meetings we had in Jordan, Israel and Egypt were not touched upon,” emphasizing:

But, of course, the Russians and the Chinese will seek to exploit it. The United States has never really come close to defaulting on its debt before. So it’s hard for us to imagine what that might look like. But, of course, it can be disastrous.

He noted, “Frankly speaking, the full faith and credit of the United States is the solid foundation upon which the global financial system is built.”

The congressman stressed that if a US debt default came into question, “all sorts of things could happen.” to caution:

The US dollar could … erode its position as the world’s reserve currency. People may choose to invest in the United Kingdom or the European Union, rather than the United States.

US Treasury Secretary Janet Yellen said last week that the Treasury Department may not be able to pay all of the government’s bills as early as June 1 “if Congress does not raise or suspend the debt limit before then.”

On Sunday, Yellen also warned on ABC’s “This Week” that if Congress fails to act on the debt ceiling, it could lead to a “constitutional crisis” with implications for financial markets and interest rates. In addition, it warned that failure to raise the debt ceiling would lead to a “severe economic contraction” in the United States. The Treasury Secretary said:

There is no way to protect our financial system and our economy other than for Congress to do its job, raise the debt ceiling and enable us to pay our bills. We should not get to the point where we need to consider whether the president can continue to issue debt. This will be a constitutional crisis.

Do you think Russia and China will take advantage of the chaos if the United States defaults on its debt obligations? Let us know in the comments section below.

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