Recently, the news that the U.S. national debt is approaching $35 trillion has sparked heated discussions.
As the world's largest economy, why does the U.S. Treasury repeatedly break the ceiling? Is the United States also short of money?
According to the data of the U.S. Treasury Department, from 2001 to 2023, for 23 years, only 2001 was in surplus, and all other times, there was a fiscal deficit, that is, a deficit.
Among them, in 2020, the U.S. fiscal deficit hit a record high, reaching $3.13 trillion.
In other words, the fiscal revenue of the United States cannot cover fiscal expenditure, and this situation has lasted for 22 years.
Military spending accounts for a large part of US fiscal expenditures.
In 2023, the United States will have $4.44 trillion in fiscal revenue and $6.13 trillion in fiscal spending, of which defense spending will be as high as $805 billion, accounting for 13% of fiscal spending, while spending on infrastructure will account for less than 2%.
In fact, no country dares to attack the US mainland, and US defense spending can be drastically reduced.
However, in order to maintain US military supremacy, the United States has sailed aircraft carriers and fleets to all corners of the globe, guarding key sea routes.
What should we do if the government's finances cannot make ends meet, but the social security of Americans cannot be reduced, and the hegemony of the United States must be maintained?
Guess right, over-issuance of currency and additional issuance of treasury bonds.
The total amount of money (M2) in the United States has increased from $11 trillion in 2013 to $208,000 in 2023, an increase of nearly 1 time in 10 years.
In comparison, in 2013, the GDP of the United States was $16.84 trillion, and in 2023, the GDP of the United States is $27.37 trillion, an increase of 63% in 10 years.
The rate of additional issuance of U.S. currency far exceeds the growth rate of GDP.
However, since the US dollar is a world currency and can circulate around the world, the over-issuance of currency by the United States has not caused domestic hyperinflation.
Another way is to borrow money from other countries through the issuance of additional government bonds.
Over the past 100 years, the U.S. federal debt has increased from $403 billion in 1923 to $33.17 trillion in 2023. It has skyrocketed by 81 times.
Especially after 2001, the U.S. fiscal situation deteriorated, and the national debt rose rapidly, constantly breaking the ceiling.
Currently, the U.S. national debt stands at $34.7 trillion, close to $35 trillion.
The Congressional Budget Office expects the U.S. national debt to reach $50 trillion by 2034.
Doesn't that look crazy?
The $35 trillion national debt, at an average interest rate of 2.97%, is as high as $1 trillion a year.
Don't forget, the U.S. government has been struggling to make ends meet for 22 years in a row!
This $1 trillion a year in interest can only be repaid by issuing more new debt.
Smart people have already seen that this game cannot be played, it is like a snowball, and the further you go, the faster the debt grows, until it is crushed by the debt.
Currently, Japan holds the largest amount of U.S. debt, at $1.15 trillion.
However, Japan's economic growth is slow, and the yen is depreciating sharply, so it will be very difficult for Japan to continue to increase its holdings of U.S. bonds.
Now, there are only a handful of countries in the world that can afford to buy U.S. bonds.
If the U.S. bonds cannot be sold, it will be fatal for the United States, because there is simply no money to repay the interest on the existing U.S. bonds.
If you don't pay the interest, you will default on your debt.
And behind the U.S. Treasury is the credit of the U.S. government. If the national debt defaults, the hegemony of the United States will quickly collapse.
In order to prevent this, the United States will use all means, even at the cost of risk.
If the dollar rate hike cannot be harvested, war may surface.
At present, the yen exchange rate has plummeted, and the exchange rate between the yen and the dollar has fallen below the mark of 161 yen per dollar.
If Japan's exchange rate collapses and the United States succeeds, the world may escape a catastrophe, otherwise, the situation may spiral out of control.
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