Digital Zeitgeist – The Head Of JP Morgan Thinks That The United States Should Not Be “Playing Games” With The Debt Ceiling
As the United States Approaches its Ceiling of $31.4 Trillion in Debt Jamie Dimon Issues a Warning That the Country’s Creditworthiness Should be “sacrosanct!”
Jamie Dimon, the Chief Executive Officer (CEO) of JP Morgan, issued a warning to the competing political parties in the United States on Thursday 19th January, as the dispute over the limit on the federal government’s ability to borrow money reached a critical stage. Dimon said that the United States should not “play games” with the debt ceiling.
“We should never question the creditworthiness of the US government. That is sacrosanct and it should never happen,” Dimon said on Thursday 19th January in an interview on CNBC. “This is not something we should be playing games with at all.”
Treasury Secretary Janet Yellen announced in a letter to Kevin McCarthy, the Republican speaker of the House of Representatives, that the department will cease new investments in the civil service retirement and disability fund as well as the postal service retiree health benefits fund until June.
In the event that Congress does not adopt a law to raise the cap on the amount of money that may be borrowed, Yellen issued a warning that any changes could be subject to “considerable uncertainty”. She attempted to head off a deadlock over the United States’ borrowing last week. If this impasse were to be broken, it might begin to stall debt repayments and send shock waves across the United States economy as well as the global economy.
“Failure to meet the government’s obligations would cause irreparable harm to the US economy, the livelihoods of all Americans and global financial stability,” Yellen told Congress.
She stated that the Biden administration would try to keep the country under that debt cap for as long as possible by using “extraordinary measures”, which involves shifting money and suspending investments in savings plans for government workers. She said that this would be done in order to keep the country from being unable to finance its operations.
In theory that could give lawmakers until June to come up with a solution, but Yellen also warned that the US treasury “is not currently able to provide an estimate of how long extraordinary measures will enable us to continue to pay the government’s obligations”.
Political parties frequently engage in conflict over the United States Treasury debt, which has doubled in the past decade alone. This conflict is a classic battleground. Since 1960, politicians have proposed 78 different ways to increase, extend, or otherwise revise the debt ceiling.
The White House continues to assert that there should be no restrictions attached to any rise in the ceiling, and they will not compromise on this subject. To prevent the United States from defaulting on its obligations, Republicans are advocating for a scheme known as “debt prioritization.”
“We’re not going to default on the debt. We have the ability to manage servicing and paying our interest. But we similarly should not blindly increase the debt ceiling,” Representative Chip Roy, a leading conservative Republican, told Reuters.
However, Dimon, who is considered to be the most powerful and outspoken banker in the United States, advised against playing political football with the issue.
“Of course Democrats will blame the Republicans and Republicans will blame the Democrats,” Dimon told CNBC. “I don’t care who blames who. Even questioning it is the wrong thing to do … That is just a part of the financial structure of the world. This is not something you should be playing games with at all.”
online sources: theguardian.com, reuters.com, cnbc.com