Goldman Sachs, Yellen Warn of US Default’s ‘Catastrophic Consequences’ — ‘There Is Real Risk to US Dollar’ – Economics Bitcoin News

Date:


A Goldman Sachs executive who also serves as the chair of a Treasury advisory committee has warned that a U.S. default poses “real risk to the U.S. dollar.” She stressed: “Anything that moves us away from being viewed as the world’s reserve currency, of being the safest most liquid asset in the world, is bad for the American people, bad for the dollar, and bad for the U.S. government.”

Goldman Sachs Agrees With Treasury Secretary Yellen on US Default Risks

Goldman Sachs executive Beth Hammack warned about the risks of the U.S. defaulting on its debt obligations in an interview on Bloomberg Television Tuesday. Hammack is co-head of Goldman Sachs’ Global Financing Group within the Investment Banking Division (IBD) and a member of the firm’s Management Committee. She also serves as the chair of the U.S. Treasury Department’s Borrowing Advisory Committee.

Regarding a possible U.S. debt default, she said: “This is a conundrum for all international investors. They don’t understand why we’ve made these appropriations and we’re not willing to pay the bills that we already agreed we would pay. And so I think that’s really confusing.”

The Goldman Sachs executive warned, “I think there is real risk to the U.S. dollar as we leave this in a more protracted state of negotiations,” emphasizing:

Anything that moves us away from being viewed as the world’s reserve currency, of being the safest most liquid asset in the world, is bad for the American people, bad for the dollar, and bad for the U.S. government.

The chair of the Treasury Borrowing Advisory Committee proceeded to explain that the dislocations being created in the U.S. Treasury bill markets are “inefficient” and they “create extra cost for the taxpayers.”

The Treasury bill markets began factoring in the risks of the U.S. defaulting on its debt obligations from next month onward after Treasury Secretary Janet Yellen and the Congressional Budget Office warned that the Treasury may not be able to pay all of the government’s bill in early June.

The Goldman Sachs executive said she agreed with Treasury Secretary Yellen that the U.S. defaulting on its debt obligations would have “catastrophic consequences for the U.S. economy.” Moreover, she cautioned that there would be “a huge ripple effect” if the Treasury stops making some payments.

On Tuesday, Yellen said at a press conference ahead of a G7 meeting in Japan that a default would “risk undermining U.S. global economic leadership and raise questions about our ability to defend our national security interests.”

A lawmaker said this week that a default poses risks to the U.S. dollar’s reserve currency status. Federal Reserve Chairman Jerome Powell has also warned of “uncertain and adverse consequences” from the U.S. defaulting on its debt obligations.

What do you think about the Goldman Sachs executive’s warning? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Subscribe

Popular

More like this
Related

Jury Begins Deliberations in $110M Mango Markets Fraud Trial

In their rebuttal, prosecutors said that Eisenberg’s legal...

Top 4 accounting firm turns to Ethereum for blockchain-based business contracts

Big Four accounting firm Ernst & Young (EY) ...

Roger Stone Endorses TRUMP Meme Token, Spurs Double-Digit Growth Amid Market Slump

Roger Stone, a seasoned Republican political strategist, lobbyist,...