A crisis for the US and global financial system is looming, unless a conflict over lifting the US debt ceiling can be quickly resolved. The conflict came into public prominence last week, when US Treasury Secretary Janet Yellen wrote a letter to Congress, warning that the government was running out of money, after a debt limit on government borrowing was reinstated on August 1. The limit had been suspended for the previous two years.

Since then, Yellen wrote, the Treasury had been “employing certain extraordinary measures” to ensure that the government could continue to fund itself, but these measures were reaching their limit. “Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations, for the first time in our history,” she said.

The Treasury was not able to provide a specific estimate of how long the extraordinary measures would last, but the best and most recent estimate was that money would run out some time in the middle of October.

This is not the first time a conflict has arisen over the debt ceiling. The last major battle was in 2011, during the Obama administration. While it was ultimately resolved, and a default avoided, the conflict produced significant turbulence in financial markets and led to a downgrade of the US government’s credit rating, for the first time in history. Standard and Poor’s lowered the nation’s credit worthiness from AAA to AA+.

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