In a meeting with President Biden and other CEOs on Wednesday, JPMorgan Chase & Co (JPM) Chief Jamie Dimon warned that Congress failing to raise the debt ceiling would unleash calamity across the U.S. economy and lobbied to scrap the the statutory deficit limit altogether.

Listing out five points in response to a question from the president, Dimon bluntly stated: "We should get rid of this debt ceiling."

"Number one is really a morality point: We all teach our children that we are supposed to meet obligations and I don't think the nation should be any different. Number two, we should never even get this close — there are huge economic costs already being borne… [and] it's already affecting the stock market," Dimon said, and "number three, we should get rid of this debt ceiling — we don't need to have this kind of brinksmanship every couple of years."

JP Morgan CEO Jamie Dimon looks on during the inauguration the new French headquarters of JP Morgan bank in Paris, France June 29, 2021. Michel Euler/Pool via REUTERSA recession could be on the cards, Dimon warns

The debt ceiling is an administrative measure imposed by Congress, first enacted in 1917, that was meant to provide flexibility to the process of the federal government's borrowing. 

The limit has been set at $28.4 trillion since August 1st, 2021.

When the U.S. hits the debt limit, the federal government cannot increase the level of outstanding debt and can only use cash on hand and spend incoming revenues. This means it may have to suspend investments, reducing the amount of outstanding Treasury securities, among other pullback measures.

"An actual default … would be unprecedented," Dimon said on the Wednesday call. "The things we know that it would do are very bad … the effects would be cascading, so day one would be bad, but the cascading effects and the ensuing weeks could go anywhere from a recession to a complete catastrophe for the global economy. And I don't know why anyone would take a chance like that."

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Treasury Secretary Janet Yellen, who also joined the meeting on Wednesday, recently used similar language in describing the urgency for Congress to act to raise the current debt ceiling — as well as explaining the inherent problem of having a debt ceiling in the first place.

US President Joe Biden and Treasury Secretary Janet Yellen (R) listen during a meeting with business leaders and CEOs on the need to address the debt limit, on October 6, 2021, in the South Auditorium of the White House in Washington, DC. (Photo by Nicholas Kamm / AFP)

"I believe when Congress legislates expenditures and puts in place tax policy that determines taxes, those are the crucial decisions Congress is making," Yellen told the Senate Banking Committee on September 28. "And if to finance those spending and tax decisions it's necessary to issue additional debt, I believe it's very destructive to put the president and myself, the Treasury secretary, in a situation where we might be unable to pay the bills that result from those past decisions."

Yellen added that a default could disrupt the market for U.S. Treasuries, seen as one of the most liquid markets in the world, which "would be a financial crisis and a calamity."

On Wednesday, Dimon noted that "American Treasury is the bedrock," adding that the nation's credibility is at stake with this debt ceiling issue.

"Trust in America and the U.S. dollar … is critical to the world economy and eventually … world peace," Dimon said. "This is a time when we should show American competence and not American incompetence."

Federal Reserve Chair Jerome Powell also stressed similar points on September 22.

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Aarthi is a reporter for Yahoo Finance. She can be reached at Follow her on Twitter @aarthiswami.

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