U.S. national debt exceeds $35 trillion: Experts: We are in an era of collapse of the dollar's status
2024-08-12
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According to the latest data released by the U.S. Treasury Department, the U.S. national debt has exceeded 35 trillion U.S. dollars. Currently, the total U.S. debt is 15% more than the total national debt of the other six G7 countries.
Screenshot of Fox News report
The International Monetary Fund has sounded the alarm twice this year, calling on the United States to address its growing debt problem.
A survey on the U.S. federal debt conducted this year by the U.S. polling organization Gallup showed that 77% of respondents were "very worried" or "seriously worried" about the federal debt problem.
Screenshot of Gallup's official website
The US debt problem has entered a state of "wild growth"
In fact, the debt problem that the American people are worried about is nothing new.
The U.S. federal government has been borrowing heavily since the 1980s. In 1985, the U.S. changed from a net creditor country to a net debtor country. In 2008, the U.S. national debt exceeded $10 trillion for the first time, marking a historic turning point. Since then, the scale of U.S. debt has risen rapidly.
For a long time, the United States has been accustomed to living on debt, "living beyond one's means", implementing "unlimited" quantitative easing, and pursuing radical and changeable monetary policies. It only cares about immediate political interests and ignores the long-term health of its finances, and its debt is getting higher and higher.
Professionals believe that the United States’ crazy liquidity stimulus policy has caused the U.S. debt problem to enter a state of “wild growth.”
Economists and relevant international organizations have issued warnings that the substantial increase in US government spending and the rising debt level, coupled with high interest rates, will lead to higher US Treasury yields and large fluctuations, which will push up global borrowing costs as a whole, thereby increasing the risk of rising interest rates and turmoil in other parts of the world, thereby undermining global financial stability.
Screenshot of CNN report
Michael Goldberg, professor of economics at the University of New Hampshire, warned that the United States' repeated efforts to reap the wealth of other countries has caused serious negative spillover effects on the world economy.
JG:"The Fed's interest rate hike will make U.S. dollar assets more attractive, causing investors around the world to want to hold more U.S. assets, thereby causing capital to flow from all over the world to the United States. This puts pressure on other countries in the world, forcing them to raise interest rates as well. This is a very serious spillover effect."
Michael Goldberg (Photo from the official website of the University of New Hampshire)
IMF Managing Director Kristalina Georgieva has also previously warned that the United States must take measures to address its debt problem.
Georgieva:"The U.S. government must take action to rapidly reduce the ratio of government debt to GDP through a series of policies, including raising taxes and addressing structural imbalances in the economy."
Screenshot of Bloomberg report
"The U.S. fiscal system is like a torn bag"
However, due to factors such as the polarization of the two parties in American politics, the debt problem has become seriously politicized. Neither party has sufficient political will and motivation to solve it.
According to David Blair, deputy director of the Center for China and Globalization (CCG) and an American economist, "the debt problem is fundamentally a political issue" and "the US president does not care what happens after he leaves office."
David Blair (Photo from the official website of the Center for China and Globalization)
Qu Qiang, Assistant Director of the International Monetary Institute of Renmin University of ChinaFurther analysis points out that in order to please their respective voter groups, politicians from both parties in the United States will always find ways to exploit loopholes in the huge and bloated financial bureaucracy to ensure that their constituencies always receive financial support. If the United States wants to truly solve its debt problem, in addition to carrying out thorough internal reforms, it must also seek cooperation externally.
The US fiscal system is like a torn bag, which is difficult to repair. Every year, politicians ask the Federal Reserve to fill various fiscal gaps by printing money.
The only way to make the whole system work is to throw more money into it. It's a bottomless pit, and naturally the debt ceiling will always be broken.
If the United States wants to truly solve its debt problem, it must streamline its institutions, cut spending, and cut the budgets in the hands of politicians. It must also rely on globalization and global supply chains to truly reduce the operating costs of the U.S. economy, and it must cooperate with partners around the world.
However, the current US economy does not provide sufficient opportunities and confidence for international cooperation.
A US financial news network commented that rising inflation, the rising US federal deficit and government welfare may undermine the dollar's dominance in the global financial system from within.
Screenshot of a report from the US financial news website "Investopedia"
At the same time, the global wave of "de-dollarization" is underway. Especially since the United States imposed financial sanctions on Russia, many countries in the world have begun to reduce their excessive dependence on the US dollar.
According to the latest version of the International Capital Flows Report released by the U.S. Treasury Department, as of May this year, Japan and the United Kingdom held U.S. debts worth $1,096.8 billion and $666.6 billion, respectively, down $30.4 billion and $14.1 billion from April this year. Among them, Japan's reduction was the largest since October last year.
According to a latest survey report released by the Official Forum of International Monetary and Financial Institutions in June this year, the proportion of central banks planning to increase their euro holdings will increase compared with the past two years. At the same time, in the long run, the demand for RMB by central banks in many countries will also increase significantly.
Screenshot of Reuters report
Federal Reserve Board Governor Christopher Waller has previously stated that in the past, he had reservations about the status of the US dollar, but now he publicly acknowledges that the role of the US dollar in the world economy is quietly changing.
File photo: Christopher Waller
In a recent interview with Kitco, American economist Arthur Laffer was more blunt in warning the US government that surging debt and unsustainable fiscal policies have caused the status of the US dollar to begin to collapse.
Lafer:"We are in a brand new era where the dollar's status is collapsing. The dollar is being replaced as an international currency, and this is the future direction of the dollar. Our defense spending policies and economic policies are wrong, and we do not have a sound monetary policy. Frankly speaking, I do not trust the dollar, the Federal Reserve and Fed Chairman Powell, and I do not think that the current US Congress and government can create a good situation for economic growth. We are still on the old path of crazy money printing, and taxes and government spending are flowing in the wrong direction. All of this essentially shows that the US government is shirking its responsibilities."
Screenshot of Jintuo.com social media
