Massive US stimulus spending to blame for global wave of inflation, Putin aide says, as Washington warns it could default on debts

Massive US stimulus spending to blame for global wave of inflation, Putin aide says, as Washington warns it could default on debts

By racking up trillions of dollars in debt and injecting huge sums of cash into the country's economy, America has contributed to rising prices and lower spending power across the world, a top Russian government official has said.

Maxim Oreshkin, an advisor to President Vladimir Putin, told the Moscow Financial Forum on Wednesday that Russia had been forced to increase public spending, but to a lesser extent.

"The economic policy response to the crisis has to match the size of the economic problem," Oreshkin said. "When you're in the deepest recession since WWII, you need to come up with answers the same size."

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"Here," Oreshkin argued, "I believe Russia has found the optimal balance between the size of stimulus spending and the way it is structured, which has made it possible to get out [of recession] and restore the economy in little more than a year."

However, according to the Kremlin official, "the US, which has been running a budget deficit of 15% of GDP for two years in a row... has most likely gone too far with the size of the stimulus and the consequence is a global wave of inflation."

Meanwhile, US Treasury Secretary Janet Yellen warned on Wednesday that Washington could ultimately default on its debt if the country's lawmakers don't agree to raise the maximum borrowing 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," Yellen wrote in a letter to members of Congress, saying reserves could be exhausted as early as October.

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Earlier Wednesday, House Speaker Nancy Pelosi (D-California) said a provision to raise the debt ceiling would not be included in draft spending measures that her party hopes to pass in the coming weeks. While admitting the country needs to borrow more, she said the issue wouldn't be addressed in the upcoming bill, which is expected to allocate another $3.5 trillion in national spending.

US President Joe Biden signed out around $1.9 trillion of American taxpayers' money in March in an effort to shore up businesses struggling as a result of the Covid-19 pandemic. In addition to making direct individual payments of up to $1,400, it extended a preexisting $300 weekly unemployment benefit and injected cash into vaccine distribution efforts. However, Republicans slammed the plan as unnecessary given positive signs for economic recovery prior to the stimulus.

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