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Why the national debt of the USA grew.

Kenny89
Posts: 200
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5/29/2019 12:10:11 AM
Posted: 3 months ago
The national debt of the United States is growing like a snowball. For the first time, The debt of the US federal government to creditors exceeded $ 22 trillion. Thus, Trump's promises to stabilize the economic situation did not meet his expectations. During his presidency, The US national debt not only did not decrease, But, On the contrary, Grew by more than $ 2 trillion. This, Of course, Is not a record increase (the US state debt reached a critical level during the eight years of Barack Obama"s rule, Having increased from $ 10. 63 trillion almost in two times), But even such growth may lead to the collapse of the American economy in the next five years.
The US national debt consists of domestic and public debt, Constituting $ 5. 9 trillion and $ 16. 2 trillion, Respectively. If domestic government debt is related to US government debt, Such as state pension funds, Public debt is related to securities owned by individuals, Corporations, The US Federal Reserve (FED), As well as the state and foreign governments.
Despite the fact that the yield of US bonds is small - about 2. 68% per annum, They represent a stable income without possible risks. That is why foreign countries willingly invest in valuable American securities. So, China owns $ 1, 121 trillion in securities.
But it seems that trade wars will soon put an end to foreign investment from the Middle Kingdom. In addition to the sanctions already imposed on China, Trump is going to impose duties on Chinese goods for another 325 billion dollars - in fact, We are talking about all exports from China to the United States. Beijing, In turn, Can respond radically: reduce investment in US government debt, Or even sell part of it. So it was in 2016, When the Celestial Empire sold bonds in the amount of 188 billion dollars. Over the past five years, Beijing has already reduced the portfolio of US government bonds by 13. 8 percent.
The story with Huawei also does not improve the situation with public debt. Unsubstantiated accusations of a Chinese corporation in "activities contrary to US national security" could lead to serious sanctions against American business in the Chinese market.
The main reason for the growth of public debt is the constant growth of the budget deficit, Which is covered by the issue of public debt. The budget deficit continues to grow. At the same time, Payments on debt in the first quarter of 2019 amounted to $ 221 billion, Which is 9% more than in the same period in 2018.
Moreover, The option of paying off debt by raising taxes or cutting costs is not even considered. On the contrary, In recent years, Trump has been pursuing a policy that supports raising public debt. For these purposes, The US president advocates the abolition of the procedure for consideration of this issue by the Congress (since only Congress can prohibit the federal government to take unlimited amounts of loan). So, In 2018, The parties reached an agreement according to which the government can increase federal loans without limit until March 1, 2019.
Thus, The US national debt has long been out of control of the federal government. According to the forecasts of American economists, Payments to the United States on public debt in 2019 will amount to 600 billion dollars. This exceeds the entire budget deficit in 2014 (439 billion) and in 2015 (483 billion) years. By 2024, The US Treasury Department is predicting the US economy will pass through the so-called "point of no return". Situations where every dollar borrowed by Washington will go to pay off previously taken loans. This will lead to the inevitable collapse of the US economic system in the near future.
Ipsofactoid
Posts: 72
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6/26/2019 5:00:38 AM
Posted: 2 months ago
"Collapse" is such a strong apocalyptic word. But, To answer by tautology "debt is debt. " And as such, It will either need to be paid, Or abrogated.

Inflation is the easy route, Having bondholders take a "haircut" is another. And the shifting of debt to equity is a third.

There are ways out of such a financial morass- none without pain, Though.

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