US Debt Ceiling Dramas Diminish Dollar’s Credibility and Reputation as Safety Asset, Warns Devere CEO

The CEO of funding administration agency Devere Group has warned that the U.S. debt ceiling dramas have weakened the U.S. greenback’s “global reserve currency’s credibility and reputation as a ‘safety asset.’” He cautioned that Congress’ debt ceiling deal “does not solve the underlying political challenges facing the U.S. and its economy.”

‘Using the Country’s Debt as a Political Weapon Undermines Confidence in U.S. Government’

Nigel Green, the CEO of Devere Group, a monetary companies firm headquartered within the United Arab Emirates, highlighted the challenges that the U.S. economic system continues to face, regardless of Congress reaching a debt ceiling deal, in an opinion piece revealed by Newsmax Friday. The deal, which President Joe Biden signed into legislation on Saturday, prevented a possible national debt default, which might have occurred on June 5 if a decision had not been reached, in keeping with Treasury Secretary Janet Yellen.

“So, let’s be clear: this down-to-the-wire deal struck this week to raise the debt limit — and only until January 2025 — does not solve the underlying political challenges facing the U.S. and its economy,” Green harassed. “The main issue is that lawmakers in recent times have had, and continue to have, little incentive to reach agreement,” he continued, elaborating:

It’s an more and more polarized political panorama, which is being amplified by algorithms and financial pursuits. I imagine it’s a pattern that may solely intensify within the foreseeable future.

Green additionally famous {that a} presidential election is developing in 2024, cautioning that the debt ceiling “political agreement” is “unlikely to be maintained for very long” if former president Donald Trump wins.

“Standoffs becoming a frequent occurrence will risk more government shutdowns, more restrictions on central bank independence and more damage to the U.S., and therefore global, economy,” the chief opined, including:

Using the nation’s debt as a political weapon, undermines confidence of buyers within the U.S. authorities amid issues concerning the authorities’s skill to correctly handle its funds.

“This loss of confidence will mean that it becomes more difficult for the U.S. government to borrow money in the future, which could lead to higher interest rates and weaker economic growth,” he warned.

The Devere CEO additionally highlighted the dangers to the U.S. greenback, stating:

Debt ceiling dramas additionally erode among the present international reserve forex’s credibility and fame as a ‘safety asset,’ which might have far-reaching repercussions for the U.S.

He not too long ago argued that “debt ceiling crises are the ‘ultimate gift’ for America’s major geopolitical rival, China, which is seeking to promote the internationalization of its own currency and to position itself as a more stable and attractive investment option, in order to attract more international investment and capital inflows.”

Green emphasised that he’s in favor of “debt ceiling reforms that take away the threat of a U.S. government default and all the implications of that, and reforms that make lawmakers in Washington truly accountable by automatically triggering spending cuts should the ceiling be reached.” However, he doubts “such reforms will come to fruition as a debt ceiling gridlock is a useful political theatre for lawmakers – on both sides – keen to push agendas.”

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