The United States will suspend the debt ceiling. This was announced by House Speaker Nancy Pelosi in a joint statement with Senate Majority Leader Chuck Schumer.
Debt ceiling: the consequences for the US economy
In recent days, US Treasury Secretary Janet Yellen has called on Congress to raise the US debt ceiling.
Currently, the government has suspended some investments to ensure liquidity. But when this amount of money runs out, the US would become insolvent, with disastrous consequences for the national economy. Not to mention that an economic crisis in the US is never isolated: there is a risk of international contagion.
Just yesterday, in the pages of the Wall Street Journal, Janet Yellen warned that in the event of a default, the US could only come out as a perpetually weak nation.
House Speaker Nancy Pelosi responded to these words, finding agreement in the Senate too.
The US has a bicameral system, which means that every law must be passed in both houses of Congress.
In their joint statement, Nancy Pelosi and Chuck Schumer announced that the House of Representatives would approve legislation to fund the government until December this year, avoiding the so-called shutdown that would have been triggered on 30 September.
In addition, the bill that will be passed will ensure the suspension of the debt limit until December 2022. This measure protects the US economy and avoids catastrophic risks.
Pelosi and Schumer explain:
“Addressing the debt limit is about meeting obligations the government has already made, like the bipartisan emergency COVID relief legislation from December as well as vital payments to Social Security recipients and our veterans. Furthermore, as the Administration warned last week, a reckless Republican-forced default could plunge the country into a recession”.
Joe Biden’s praise
US President Joe Biden welcomed the Democrats’ move.
In a tweet he stated:
“I applaud this plan from Pelosi and Schumer to keep the government open, provide disaster relief, and avoid catastrophic default. This is a bipartisan responsibility, just as it was under my predecessor. Blocking it would be inexcusable”.
The relationship between Bitcoin and US debt
On social media, the news from the US Congress has sparked the enthusiasm of some who see a possible link with Bitcoin.
In reality, Bitcoin is currently being overwhelmed by the crisis in the financial markets and the panic coming from China, where the Evergrande case is threatening to take its toll on the entire system. There is speculation of something similar to what happened in 2008 with the collapse of Lehman Brothers.
The fear that is sweeping the markets has also infected Bitcoin, which has returned below 43,000 dollars, with a loss of 6% in 24 hours. Ethereum is also struggling to maintain support at $3,000.
It is almost like we are seeing the same scene as in March 2020 when panic in the markets also swept through the crypto sector and Bitcoin fell to below $4,000. Bitcoin has proved resilient enough to recover and multiply its value by 15 times. The crypto community is confident that BTC will bounce back.