Crisis facing the US economy (symbolic picture)

The topic of America's 'date sealing' remains a hot topic these days. The world's most powerful economy seems to be going through a crisis and it is being discussed all over the world. If there is no agreement on debt sealing in the US before June 1, then the world's most powerful country will default. Let us tell you that in the past, US Treasury Secretary Janet Yellen wrote a letter to the US Parliament saying that if the government does not increase the borrowing limit, then it will not be able to pay the US bills in June, because the government treasury is running out of money.

The seriousness of the
matter can be understood from the fact that US President Joe Biden canceled the Quad meeting in Sydney so that the issue of debt sealing could be resolved in time. In fact, the problem of debt sealing that has arisen in front of America today, there are many years of events behind it.

Let's first understand what debt ceiling is and why it is threatening to default on America. All countries in the world have their own expenses, governments meet - social security schemes, medical schemes, incentives for the army, industries and many other types of expenses. To meet these expenses, governments earn from tax or other sources. Usually, expenses are always higher than earnings. America is also not untouched by this bitter truth.

America takes loans to meet its expenses, but there is also a limit to how much it can borrow, because these debts also have to be repaid. This limit is called debt ceiling, which is being demanded to increase. Every year, America's expenses are much higher than its earnings, creating a deficit or deficit. During the last 10 years, this deficit has increased from $ 400 billion to $ 3 trillion.

So will America default
, see if America takes a loan to pay government bills, which it will also have to return with interest. The US government sometimes borrows by issuing bonds and sometimes through other securities, but after a time its borrowing limit ends. In such a situation, if the US Treasury needs money to meet government expenses, then it will not have it, and it will default.

Us Treasury Chief Janet Yellen has repeatedly asked the US Congress to raise the debt limit to protect the US from the risk of at least historic default. The US debt limit is currently $ 31.4 trillion, while the US has borrowed $ 30.1 trillion so far.

However, the history of America is also that this debt limit has been increased many times. Since 1960, he has extended this ceiling 78 times and has never defaulted. So this time too, if the US Parliament increases the limit, then America can avoid defaulting.

How did this situation happen?
How did America get to this point? See, for this, you have to start several decades back. During 2001 and 2008, when the recession engulfed America and the whole world, America poured money into the financial system like water to bring its country out of the recession, which lasted for many years. In 2017, Trump's government cut taxes, limiting the source of income. The Covid pandemic has done the right thing. Which increased tremendous pressure on the US government treasury. During this time, there was a huge debt on America.

Treasury Secretary Janet Yellen said that if the debt limit is not increased, the US will default on its payments before June 1 next month. This means that before June 1, there is no other way than to increase the debt ceiling with consent to the US. Joe Biden has announced in his latest statement that the US will not default, his talks on increasing the debt ceiling have been very good and an agreement will be reached very soon. But until Biden agrees to an agreement to extend the Republican party's debt ceiling, any claim will remain a mere claim.

Where's the screw stuck?
The Republican Party wants the Biden government to reduce its spending, the Republican Party has a condition that if the Biden government meets the fy 2022 limit, then it can be agreed to remove the debt ceiling. While the Biden government is seeing this as a new political move of the Republican Party, if the Biden government does not spend on the schemes announced, then its impact can be seen on the upcoming elections. Therefore, he is also not ready to back down. This is where the matter is stuck.