Bloomberg News reported on the 15th (local time) that the possibility of the US falling into actual default (default) due to the failure of the US government’s debt ceiling negotiations is at the highest level in US history.
In fact, US debt ceiling negotiations are an annual event. Although the ruling and opposition parties engaged in extreme confrontation until the last minute, the U.S. has never actually fallen into default.
Experts agree that 2011 was the worst year for US debt ceiling negotiations. At the time, it was on the verge of an actual default.
But this time it’s even more dangerous than it was then, Bloomberg predicted.
A Bloomberg survey of 637 economists around the world found that 60% of respondents said the situation is worse now than it was in 2011.
This is because the Joe Biden administration and the Republican Party, which controls the House, are in an extreme confrontation.
The Republican Party is sticking to the hardline position that there will be no debt ceiling negotiations unless the Biden administration cuts government spending.
Former President Donald Trump is admonishing Republican lawmakers that “the United States should be allowed to fall into actual default.”
As long as the ruling and opposition parties do not reach a dramatic last-minute agreement, a default could actually occur in the United States this time.
Bloomberg also introduced safe investment destinations in case the US actually defaults.
After all, the safest asset is gold. More than 50% of survey respondents cited gold.
Next is US Treasuries. When the US declares default, it is normal for US Treasuries to become pieces of paper. However, since the only thing to believe in is US Treasuries, many experts believe that US Treasuries will rally.
Next is Bitcoin. Bitcoin recently rallied as it was seen as a safe haven in the wake of the US financial crisis. If the US falls into actual default, it can be perceived as a refuge.
In addition, the dollar, yen, and Swiss franc are in order, Bloomberg reported.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.