Fed's Williams: U.S. debt default would be 'very, very dangerous'
BOISE, Idaho (Reuters) - As serious as the effects of the government shutdown are on the economy, the potential of defaulting on U.S. government debt if lawmakers do not raise the federal borrowing limit next week is "orders of magnitude" bigger, a top U.S. central banker said on Thursday.
The president of the San Francisco Federal Reserve Bank, John Williams, told business leaders and politicians at Boise State University that politicians in Washington are playing a "very, very dangerous game" with brinkmanship over budget talks and the debt ceiling.
The Treasury has said it will run out of money to pay its bills on October 17.
The effects of a default, which could ensue if Congress does not raise the debt limit, could undermine confidence in the U.S. dollar, Williams said.
So far, though, low long-term interest rates and inflation expectations suggest the world still believes U.S. leaders will solve fiscal problems. In other countries, Williams said, unsustainable fiscal policies typically lead to inflation.
(Reporting by Ann Saphir)
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