In the claim, which was spread by some important foreign media sources late today, it was stated that the stock markets would lose 45% value if the White House administration could not increase the debt limit and the USA defaulted.
Although it has just been brought to the agenda, it is actually based on the White House report dated May 3.
In other words, although the development in question is true, it is not new and has been shared by the White House officials on official websites before.
The fact that this claim was voiced by foreign media sources as if it was new caused rumors that FUD was spreading.
What Did the White House Administration Say in its May 3 Report?
The White House has issued a stern warning that if Congress fails to raise the debt ceiling and the US fails to meet its obligations, the US stock market will fall by more than 45% and 8 million Americans will lose their jobs.
The debt ceiling is the limit on the amount of money the U.S. government can borrow to pay for services such as social security, medical care, and the military. The government spends more each year than it receives from taxes and other sources, leaving a deficit that adds to the total debt.
The US has never defaulted on its payments before, so it’s unclear exactly what will happen if it defaults. But experts agree that this will be disastrous for the US and the global economy.
In a letter to Congress in January, Treasury Secretary Janet Yellen said failure to raise the debt limit would cause “irreparable damage” to the US economy, the livelihoods of all Americans and global financial stability.
White House: “The Stock Market Could Drop 45 Percent If The U.S. Goes Bankrupt”
The White House said in its latest report on the subject:
“In the case of a long-term default, the costs will be even greater. A CEA simulation of the impact of a prolonged default shows a sudden and sharp recession in the Great Depression ranking. In the third quarter of 2023, in the first full quarter of the simulated debt ceiling, the stock market fell 45 percent, hitting retirement accounts; meanwhile, consumer and business confidence have been hit hard, causing a decline in consumption and investment.
Unemployment rises by 5 percentage points as consumers reduce consumption and businesses lay off workers. Unlike the Great Depression and the COVID recession, the government cannot help consumers and businesses. The economy is slowly recovering as the crisis continues and unemployment is still 3 percentage points higher at the end of 2023.”
Of course, such a fall in the stock market can lead to a serious decline in Bitcoin.
*Not investment advice.
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It's what this admin. wants.