https://finance.yahoo.com/news/us-hits-31-4-trillion-234748493.html
US 30 trillion. debt is mostly borrowed from China.If China calls in its loan it would cause a default wch would trigger a global financial and economic collapse.
The global financial system is volatile and unstable and would topple like a house of cards.
America's. only response would be to keep raising its "debt ceiling" (allowing it to borrow more money),and for the central bank (federal reserve) to print more money (so-called "quantitative easing"!). But this action devalues the currency (i.e. decreases the buying power of the currency)as people lose trust in the value of. paper money. (the value of money is measured by how much you can buy with it!). This results in having to pay more and more for the same item(inflation).
Even at a modest interest rate of 5%, the debt service cost for 30 trillion dollars is 1.5 trillion.This is close to 100 % of US annual budget (1.45 trillion) and 5,370 % of its 2023 GDP.($26,695.58B)
the pie chart says 396 billion is spent annually on servicing the debt...so this works out to an interest rate of 1.3%. So the average interest rate being charged on the 30 trillion debt is 1.3% (not 5%).
ReplyDeleteNot surprisingly the US government can borrow money at a much lower interest rate than you and I!
Still, 396 billion isn't chump change! That's 27.3% of the annual budget! ---
ReplyDeleteThat's 396 billion that is not available for public services such as education, healthcare, infrastructure, etc..The interest service cost of 396 billion is 162% of the total education budget!
US must raise its debt...or default.
DeleteDefaulting would take the global economy down!
US increases 31.4 trillion debt limit to avoid default
ReplyDeletewww.nytimes.com/2023/05/28/us/politics/debt-ceiling-deal-takeaways.html
https://www.msn.com/en-gb/money/other/biden-and-mccarthy-agree-in-principle-to-raise-31-4-trillion-limit-for-two-years-to-avoid-default/ar-AA1bMK8t
US averts economic collapse by kicking the debt crisis down the road ( suspends the debt ceiling limit until 2025)
ReplyDeletehttps://www.bbc.com/news/world-us-canada-65795242
Canada will be paying 43.9billion in debt servicing costs in 2023!
ReplyDelete
ReplyDeleteThat money should be. used to proviide valuable services, not wasted on servicing debt. Interest paid on debt is wasted money