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2024-07-02 Economy
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The US is holding the whole world in its fist with its problems, the situation is stalemate
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Direct Translation via Google Translate. Edited.
[Regnum] The world has reached a stalemate with the US national debt. This opinion was expressed to a Regnum News Agency correspondent on July 1 by Yuri Tverdokhleb, Associate Professor of the Faculty of Finance and Banking at RANEPA, commenting on the opinion of analysts William Ruger and Thomas Savage. In an article for the American magazine The National Interest, they suggested that an increase in budget expenditures and national debt could lead to serious problems in the US economy, which would directly affect the country's defense capability.
| In January, the US Treasury reported that the national debt had exceeded $34 trillion, increasing by $4 trillion during 2023. |
Tverdokhleb agreed that the national debt is a serious problem for the US economy. He noted that the approaches to managing the foreign debt of US President Joe Biden and his predecessor Donald Trump differ greatly. Thus, during the recent debates, Trump proposed reducing the US debt by stimulating aggregate demand and production through tax reform and reducing the tax burden, including on large businesses. In his opinion, this could lead to economic revival and income growth due to increased production activity. These proposals of Trump are more rational and reasonable, the economist believes.
Continued from Page 3
According to the expert, Biden's rule has led to the national debt reaching an unprecedented level and continues to grow against the backdrop of a recession and deterioration of all other macroeconomic indicators. Biden and his entourage, on the contrary, propose to increase the tax burden, the expert explained.
"The economy of any other country would have exploded long ago from such an unprecedented national debt. But due to foreign policy pressure and the artificial use of the dollar as one of the key world currencies, the US can generate debt obligations. A stalemate was created, as a result of which countries that have accumulated a huge amount of dollar reserves, if they present these dollars to the Federal Reserve System, they themselves will suffer. That is, the US holds the whole world in a fist with its problems. Many countries, especially the main holders of dollar assets, understand that if they recognize the insolvency of this currency and the US economy, they themselves will suffer greatly," Tverdokhleb noted.
According to him, the sanctions pressure that the US is exerting on countries that are not to their liking, such as Russia, China and others, is pushing these countries to decide to return to the initial position. Then the US will really collapse. And Washington understands this, which is why they are pursuing such an aggressive policy and trying to distract public attention from these problems. The dependence of the Russian economy on the dollar is decreasing, and it is decreasing qualitatively and in large volumes, the economist emphasized.
As reported by the Regnum news agency, Russian President Vladimir Putin said on June 7 that the American economy is not backed by anything, the US conditionally owes the world economy 54.3 trillion dollars. The head of state said that the Bretton Woods system, which was based on the gold equivalent, died long ago. He recalled that in 1976 the United States decided to move away from the gold equivalent and the Bretton Woods system was replaced by the Jamaican system, which unhooked the dollar from gold. At its core, Putin noted, is trust in the American economy.
At the same time, he continued, the total volume of US debt to the global economy has now reached $54.3 trillion. Of this amount, $12.6 trillion belongs to individuals who keep it in their bank accounts outside the US, and another $10 trillion is taken by American companies.
At the beginning of the year, the US Congressional Budget Office published a report according to which by the end of 2034, the US national debt is expected to grow continuously and reach a historical anti-record. It is specified that by the end of 2024, the US national debt will amount to 99% of GDP, and by the end of 2034, it will reach 116% of GDP. This will be the highest level ever recorded.
Economist and trader, author of the bestselling book "The Black Swan" Nassim Taleb has warned of a "death spiral" that the US could end up in due to budget deficits and rising national debt. In his opinion, the deficit in the federal treasury is growing at such a rate that it would take a miracle to reverse the damage.
In turn, the head of the American bank JPMorgan James Dimon pointed out that the impressive national debt has pushed the US economy to the "edge of the cliff." The banker agreed with the opinion of the former Speaker of the House of Representatives of Congress Paul Ryan, who called the national debt a growing snowball with the most predictable crisis in US history.
In January, the US Treasury reported that the national debt had exceeded $34 trillion, increasing by $4 trillion during 2023.
| Idiots. Javier Milei was just elected president in Argentina, and has already cut inflation to zero. Of course that does assume that one’s goal is a functioning economy… |
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