US Treasury Secretary Janet Yellen warned that the US government could face an unprecedented default if an agreement is not reached quickly to raise the debt ceiling in early June. If the debt ceiling is not raised, the federal government will not be able to meet all of its obligations and will have to prioritize the most important payments, such as debt maturities, which could lead to delays in other payments such as those to government suppliers, pensions, welfare payments, and public salaries.
A default would occur when a government fails to make payments to its creditors, which may constitute a partial or total default. The United States has a very high credit rating, and its credit is considered to be fully secure, but any default would have a direct economic impact on the country, with the possibility of increased unemployment, reduced money flowing into the economy, and an effect on investor confidence in the US debt itself.
The US debt is essentially in domestic hands, with over 75% of it held by domestic economic actors and over $12 trillion held by the government and federal agencies.
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