How can the U.S. government debt bubble be solved?

October 29, 2024 at 05:40PM
If people cared about the environment as much as U.S. debt,
we might have hit net zero emissions by now. But why think about the planet
when it’s easier to predict the collapse of the world’s biggest economy?

Every week or so, someone expresses deep concern
about rising U.S. debt. Recently, Robert Kiyosaki, then Elon Musk, and now
the CEO of Goldman Sachs, weighed in, urging trouble for the country.

To put it in perspective, the U.S. national debt is nearing
$36 trillion (about 119% of GDP). It has increased more than 8% in the past
year because of spending increases approved by Congress and the president.

Also, remember that in early June 2023, Biden signed a deal
to suspend the debt ceiling until January 1, 2025. This means the U.S. Treasury
can borrow as much money as it needs until 2025.

High interest rates, the rising cost of servicing that debt,
and the budget deficit currently between $1.8 trillion and $2 trillion (or 6%
to 7% of GDP) do nothing to help the situation.

Interestingly, just ten years ago, the Congressional Budget
Office (CBO) projected that in 2024, the debt would be at 78% of GDP and
wouldn’t hit 100% until 2039. Well, sometimes you miss the mark a bit…

Those who think things will get better after the election
are probably in for a disappointment. As Jim Rogers pointed out, neither Kamala
Harris nor Donald Trump seem interested in addressing the U.S. debt problem.

Neither plans to “tighten their belts” on spending. On the
contrary, they talk about easing restrictions. For example, the Republican
candidate wants
to eliminate some taxes, thus putting pressure on the budget.

The problem is that almost one-fifth of the taxes collected
will go to interest payments. Taking some of that revenue out of the equation
could cause the government even more headaches.

While the situation isn’t catastrophic — Japan, for
instance, has it even worse — budgetary appetites must be reined in, which
could eventually slow economic growth, thus negatively impacting the S&P 500 index.

The idea that the Fed can simply print money to pay off the
debt could result in a falling dollar (the consequences can be seen on the DXY chart), rising
inflation, and ultimately an economic crash, so that’s not a practical
solution.

In addition to the usual options of raising taxes and
cutting spending, another possibility is to keep inflation high, which would
devalue money and debt, although it would affect household welfare.

This article was written by FL Contributors at www.forexlive.com.

For News Subscribe Us!

If you wish to receive the weekly market report, please subscribe. For a daily report please go to contact form to speak to the sales team.

You have been successfully Subscribed! Ops! Something went wrong, please try again.
PikPng.com_apple-icon-png_BBB

register your interest now

ALL RIGHTS RESERVED © 2024 HUBFX
Business Office at 7 Bell Yard, London, WC2A 2JR, United Kingdom

HUBFX Asia  Business Office at
100 Peck Seah St, 079333, Singapore

ALL RIGHTS RESERVED © 2024 HUBFX
Business Office at 7 Bell Yard, London, WC2A 2JR, United Kingdom

HUBFX Asia  Business Office at
100 Peck Seah St, 079333, Singapore

For clients based in the European Economic Area, payment services for HUBFX are provided by CurrencyCloud B.V.. Registered in the Netherlands No. 72186178. Registered Office: Nieuwezijds Voorburgwal 296 – 298, Mindspace Nieuwezijds Office 001 Amsterdam. CurrencyCloud B.V. is authorised by the DNB under the Wet op het financieel toezicht to carry out the business of an electronic-money institution (Relation Number: R142701).  For clients based in the United States, payment services for HUBFX are provided by The Currency Cloud Inc. which operates in partnership with Community Federal Savings Bank (CFSB) to facilitate payments in all 50 states in the US. CFSB is registered with the Federal Deposit Insurance Corporation (FDIC Certificate# 57129). The Currency Cloud Inc is registered with FinCEN and authorised in 39 states to transmit money (MSB Registration Number: 31000206794359). Registered Office: 104 5th Avenue, 20th Floor, New York , NY 10011. For clients based in the United Kingdom and rest of the world, payment services for HUBFX are provided by The Currency Cloud Limited. Registered in England and Wales No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money (FRN: 900199). Please refer to the Terms of Use here.

Payment services for HUBFX UK and US are provided by The Currency Cloud Limited. Registered in England No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money (FRN: 900199) and The Currency Cloud Inc. which operates in partnership with Community Federal Savings Bank (CFSB) to facilitate payments in all 50 states in the US. CFSB is registered with the Federal Deposit Insurance Corporation (FDIC Certificate# 57129). The Currency Cloud Inc is registered with FinCEN and authorized in 39 states to transmit money (MSB Registration Number: 31000160311064). Registered Office: 104 5th Avenue, 20th Floor, New York , NY 10011 

 

Payment services for HUBFX are provided by The Currency Cloud Limited. Registered in England No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money (FRN: 900199) and The Currency Cloud Inc. which operates in partnership with Community Federal Savings Bank (CFSB) to facilitate payments in all 50 states in the US. CFSB is registered with the Federal Deposit Insurance Corporation (FDIC Certificate# 57129). The Currency Cloud Inc is registered with FinCEN and authorized in 39 states to transmit money (MSB Registration Number: 31000160311064). Registered Office: 104 5th Avenue, 20th Floor, New York , NY 10011 and CurrencyCloud B.V.. Registered in the Netherlands No. 72186178. Registered Office: Nieuwezijds Voorburgwal 296 – 298, Mindspace Nieuwezijds Office 001 Amsterdam. CurrencyCloud B.V. is authorised by the DNB under the Wet op het financieel toezicht to carry out the business of a electronic-money institution (Relation Number: R142701)

Rates are indicative only. Please log in for getting your rates.