The expert predicted the devaluation of the dollar due to the failure of the US debt ceiling

The US rejection of the debt ceiling may lead to a sharp weakening of the dollar and an increase in inflation, this decision will only accelerate the build-up of government debt, which will eventually provoke a devaluation of the US currency. Maxim Chirkov, Associate Professor of the Department of Economic Policy and Economic Measurements at GUU, told Izvestia on June 5.

Earlier it was reported that the American leader Donald Trump said that the US government debt ceiling is too destructive and should be completely abolished in order to avoid an "economic catastrophe."

"Abandoning the debt ceiling is a very drastic measure. There will be no formal restrictions on borrowing anymore, which means that the debt will grow even faster, because servicing it at high rates is becoming increasingly difficult," Chirkov said.

The expert compared the US economy to a pyramid scheme, since without new loans, the authorities can no longer cover current obligations.

"The situation is not critical yet, but it will worsen in the coming years. If the debt ceiling is lifted, borrowing will accelerate, and this is a direct path to the devaluation of the dollar," the expert emphasized.

According to the expert, the only way to reduce the debt burden is to weaken the dollar.

"At current prices and interest rates, it becomes impossible to service the national debt. Devaluation is inevitable — the only question is when it will happen," Chirkov said.

He also noted the risks of a sharp increase in inflation in the United States. As soon as the dollar starts to weaken, inflation may accelerate significantly. Even if the authorities try to reduce costs, the high debt burden will put pressure on the economy and prices will continue to rise.

The head of the US Treasury Department, Scott Bessent, announced on May 9 that in August the United States could face default due to its national debt if the US Congress does not raise or suspend the debt limit. At the same time, he called on congressional staff to increase or suspend the debt limit by mid-July. Currently, the US national debt is over $36 trillion.