The United States' debt scale has finally broken through 31 trillion US dollars, which is already very close to the statutory limit of 31.4 trillion US dollars set by the U.S. Congress for the government's borrowing capacity. If the United States continues to borrow money without any bottom line like this, will there really be a debt crisis? Let the data speak, and let you see the truth behind the facts. Follow me, and I will share some wealth dry goods with you every day.
Now people all over the world are worried about the issue of U.S. debt default, but it seems that only Americans themselves are not worried. We must know that 31 trillion US dollars is a huge number! It is equivalent to 1.36 times the GDP of the United States in 2021, and it is even more than the total economic output of China, Japan, Germany, and the United Kingdom in 2021.
If these debts are evenly distributed to every household in the United States, it is equivalent to each household being in debt by 236,000 US dollars. According to the current exchange rate, it is equivalent to 1.68 million yuan. This is really not a dream of being a "millionaire in debt"! Just thinking about it is scary.
So we can't help but ask, why does the United States, with such a developed economy and arguably the world's number one, still owe so much money, and where has all this money been spent?
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Although the economic scale of the United States is the world's number one, the larger the scale, the higher the debt. Because the United States is used to spending money extravagantly, taking advantage of the dollar hegemony, the trump card every time there is a problem is to print money.
Especially since the outbreak of the epidemic in 2020, in order to stimulate economic development, the Federal Reserve has started the printing press to print money extensively. For example, like the 1.9 trillion US dollar relief plan implemented this year. In addition, the U.S. government also distributes money to the whole people to let everyone consume.
In addition to spending money extravagantly by itself, the United States also throws money outwards in large amounts. Just like this Russia-Ukraine conflict, since February this year, the United States has provided a total of about 66 billion US dollars in aid to Ukraine.
But this money is not printed out of thin air, but the United States is eating the food of the next year in advance, and the U.S. debt is exchanged in the form of U.S. debt. Due to the large amount of dollars released by the United States in recent years, the scale of U.S. Treasury bonds has continuously refreshed records and has reached the statutory limit many times.
In October 2021, the statutory limit of the U.S. debt scale at that time was 28.9 trillion US dollars. By December 2021, after repeated consultations by the U.S. Congress, it was decided to raise the debt scale limit to 31.4 trillion US dollars. It has only been a year, and the U.S. debt scale has increased by more than two trillion, reaching the critical point of the debt limit again.
Looking back, in the past five years, the scale of U.S. Treasury bonds has increased by 55.5%. Since the end of World War II, the U.S. Congress has modified the debt limit 98 times, most of which were to increase the scale of Treasury bonds.Will such a massive debt scale really not trigger a debt crisis in the United States?
We need to understand that a debt of 31 trillion, if calculated at an annual interest rate of 2%, would amount to an interest payment of 600 billion US dollars per year. According to authoritative institutions' forecasts, the United States federal government's expenditure on interest will increase by one trillion US dollars over the next 10 years.
Now, American media have stated that the US national debt, at a staggering 31 trillion US dollars, could ultimately destroy the US economy. This is because the debt-to-GDP ratio of a country is generally controlled within 70%, while the United States' debt has now far exceeded the red line.
The US debt crisis is truly on the brink of happening.
Faced with such a massive debt scale, the United States is very likely to adopt several strategies in the future:
1. Stirring up global disputes and then reaping substantial profits from war and energy.
Just like the current Russia-Ukraine conflict, the United States can fill the domestic economic deficit by selling military products. In addition, taking advantage of Europe's energy shortage and disregarding the interests of allies, the United States has led the way in raising prices for selling natural gas to Europe. Through these events, we can see that in the face of massive debt, making money is the most fundamental goal for the United States.
2. Employing "rogue-like" tactics to default on debts.
Just as the United States froze more than 30 billion US dollars of Russian funds this time, by finding any excuse, it can then confiscate the assets of other countries in a seemingly legitimate manner, which can also fill the economic deficit of the United States.
3. Continuing to print money to repay foreign debts.Although printing money will increase the United States' debt scale and raise inflation, it is not impossible to trade time for space. Instead of printing money without limits, a steady and slow approach can be taken to gradually restore the vitality of the U.S. economy to repay the debt. Let's not forget that even with consecutive interest rate hikes this year, the U.S. dollar is still being overissued; otherwise, where did the $31 trillion debt come from?
Looking at the current situation in the United States, the possibility of continuing to print money is quite high. This is because the downward pressure on the U.S. economy is too great, and its own blood-making function is declining. Secondly, the U.S. dares not cut public spending, nor does it dare to raise taxes on businesses to save money, putting it in an awkward situation where it cannot increase revenue or reduce expenditures.
In this situation, the U.S. may have no choice but to raise the debt ceiling again in the coming actions.
From the standpoint of the United States, no matter what means are taken, it is absolutely impossible to allow U.S. debt to default. Because once U.S. debt defaults, the position of the dollar's hegemony will come to an end. However, on the other hand, no matter what means the United States takes in the future, this will plant hidden dangers for the U.S. financial crisis.
It is not impossible that the social economic order has already been reset before the U.S. financial crisis has even erupted. This is not an impossibility, because if we look at the 5,000-year history of Chinese civilization, it is not difficult to find that even the most powerful dynasties only lasted a few hundred years.