Associated Press reported on October 4 that the daily financial report released by the U.S. Treasury Department on the same day showed that the total debt of the U.S. country has exceeded US$31 trillion, reaching US$31.1 trillion. The amount of debt is getting closer to the statutory maximum of about $31.4 trillion that Congress has set for the U.S. government's borrowing capacity, and the impact is already facing a high inflation, rising interest rates and a strong and vulnerable economy.
As the recent Fed continues to aggressively raise interest rates in to curb inflation, more and more problems are exposed. The outlook for US economic growth deteriorates, the labor market weakens, and the gap between the rich and the poor continues to intensify.
At the same time, the yen depreciated sharply against the US dollar, forcing the Japanese government to interfere in the foreign exchange market for the first time in 24 years. Hitomi Tada, chief economist of Japan Sigma Capital, said in an exclusive interview with Xinhua News Agency recently that it is not only Japan that is in trouble due to the US rate hike, but the United States is transferring difficulties and crises to the world.
exceeded US$31 trillion for the first time
US Treasury bonds approached the upper limit
Data shows that as of October 3, the balance of outstanding federal government debt in the United States was approximately US$31.1 trillion, which has greatly exceeded the US$23 trillion in the whole year of last year.
The Peter Peterson Foundation of the United States pointed out that US fiscal spending had already embarked on an unsustainable path before the outbreak of the new crown pneumonia epidemic, and the epidemic has rapidly exacerbated the fiscal challenges in the United States. In order to respond to the epidemic, the government has introduced multiple rounds of fiscal relief measures and relied on issuing bonds to raise funds.
The foundation's CEO Michael Peterson said the continuous accumulation of federal government debt is the result of the repeated "irresponsible" between the Democratic and Republican parties in the U.S. Congress on fiscal issues. Over the past few decades, American politicians have repeatedly chosen to cut taxes and promote government spending plans rather than considering the future of the United States. Analysts generally believe that rising debt challenges the fiscal sustainability of the U.S. government and negatively impact the future of the U.S. economy.
In February this year, US Treasury bonds exceeded US$30 trillion for the first time
In recent years, the scale of US federal government debt has been approaching or even reaching the debt ceiling many times. At the end of October last year, the U.S. federal government had hit the then-$28.9 trillion debt ceiling. Since then, the U.S. Treasury Department has taken unconventional measures to avoid debt defaults. Until December last year, the U.S. Congress passed legislation to raise the debt ceiling to $31.4 trillion. Since then, the scale of debt of the U.S. federal government has continued to rise. On February 1 this year, a report released by the U.S. Treasury Department showed that the total U.S. Treasury bonds exceeded $30 trillion for the first time.
At present, the US debt ceiling will face the risk of being broken again.
debt scale continues to rise, approaching the debt ceiling many times
debt ceiling is the highest amount set by the US Congress for the federal government to fulfill the payment obligations it has been generated. Touching this "red line" means that the US Treasury Department's loan authorization is exhausted. The U.S. Congress first established debt restrictions in 1917, aiming to regularly review government spending status. Since the end of World War II , the U.S. Congress has revised its debt ceiling 98 times, most of which are raised.
The "wild growth" of US Treasury bonds has caused concerns from all walks of life
Against the backdrop of the US government's continuous expansion of fiscal spending and the Federal Reserve's continuous interest rate hikes, the "wild growth" of US government debt has caused concerns from all walks of life.
Maya McGinias, chairman of the Federal Budget Accountability Committee of the United States' independent research organization, pointed out that five years ago, the total US federal government debt reached $20 trillion, but the US government is still borrowing. This year alone, Congress and the White House have approved $1.9 trillion in new loans. Biden has approved a new deficit of $4.9 trillion since taking office. As the Federal Reserve raises interest rates sharply, the interest cost on federal debt has risen significantly. The Peter Peterson Foundation in the United States expects that the U.S. federal government's spending on interest rates will increase by $1 trillion in the next 10 years due to rising interest rates.
Tax debts are high, threatening the U.S. national economy and people's livelihood
The high and rising debts of the U.S. not only pose a challenge to the U.S. fiscal policy, but also threatens the future of the U.S. economy.Social Security and federal medical insurance , which are closely related to the people's livelihood in the United States, are on the verge of bankruptcy. Among them, federal medical insurance is only 6 years away from bankruptcy, and social security is only 12 years away from bankruptcy. However, policy makers have not come up with any plans to build a solid financial foundation for both projects.
Increases private sector lending costs
The long-term impact of federal debt on the U.S. economy cannot be ignored. The U.S. Congressional Budget Office issued a report earlier this year warning that rising high debt will increase borrowing costs in the private sector, leading to a decrease in corporate investment and will drag economic growth over time. In addition, the risk of investors losing confidence in the U.S. government's debt repayment ability will increase, which may lead to sudden rise in interest rates, spirals of inflation, or other chaos, and the possibility of a fiscal crisis in the United States will increase. The rising huge debt will prevent the United States from better responding to climate change, the next pandemic, and building an inclusive economy.
may trigger an international financial crisis
In addition, economists generally believe that if US debt truly defaults, the consequences will be more serious and may even trigger an international financial crisis.
"If it continues, it will destroy the US economy."
The Associated Press reported on October 4 that the daily financial report released by the US Treasury Department on the same day showed that the total U.S. national debt has exceeded US$31 trillion. The amount of debt is getting closer to the statutory maximum of about $31.4 trillion that Congress has set for the U.S. government's borrowing capacity, and the impact is already facing a high inflation, a rising interest rate and a strong and vulnerable economy.
reported that while President Biden boasted about the administration's efforts to reduce the deficit this year and recently signed the so-called Inflation Cut Act to try to curb soaring prices caused by many economic factors, economists say the latest debt amount is worrying. Princeton Universityeconomician Irving Zidal said interest rate hikes will exacerbate the rising U.S. debt and make the debt itself more costly. To curb inflation, the Federal Reserve has raised interest rates several times this year.
Zidal said the debt problem “should prompt us to consider certain tax policies that have almost passed the legislative process but have not received enough support”, such as raising the tax rate for the rich and closing accompanying equity loopholes—it allows wealth managers to treat their income as capital gains. Zidal said: "I think the key to this issue is that if you have not been worried about debt before, you should worry now; if you have been worried before, you should worry more now."
reported that the Congressional Budget Office released the U.S. debt burden report earlier this year, warning in its 30-year outlook report: If not resolved, debt will soon spiral to new highs and may eventually ruin the U.S. economy.
The new crown epidemic has highlighted and aggravated the gap between the rich and the poor in the United States
Xinhua News Agency Los Angeles, October 4 Summary: The new crown epidemic has highlighted and aggravated the gap between the rich and the poor in the United States
The problem of the gap between the rich and the poor in the United States has existed for a long time. Since the outbreak of the new crown epidemic, this problem has become increasingly prominent. With the recent aggressive interest rate hikes in the U.S. Federal Reserve hikes in recent times to curb inflation, the outlook for U.S. economic growth deteriorates, the labor market weakens, and the gap between the rich and the poor continues to intensify.
In April this year, the American civil rights organization "Poor Movement" and United Nations Sustainable Development Solutions Network jointly released a report saying that three years after the outbreak of the new crown epidemic, the gap in the mortality rate between the poor and the rich in the United States has further widened. At the peak of the epidemic caused by the mutated strains of delta and Omickron , the mortality rate in poor counties is much higher than that in wealthy counties.
Co-chair of the "Poor Movement" Liz Theo Harris said: "In a country where 87 million people are not insured or underinsured and 39 million people are underpaid for wages", new crown has always been a "poor epidemic".
Papers published in many professional academic journals also believe that since the outbreak of the new crown epidemic, the gap between the rich and the poor in the United States has become increasingly prominent. This social structural contradiction not only did not ease with the government's introduction of response measures, but instead intensified.
A study released in July by the Journal of the American Medical Association showed that from 2019 to 2021, life expectancy in different groups has changed dramatically in the wealthiest California , the richest , California, in the United States, and the new crown epidemic is a key factor. Before the epidemic, the average life expectancy of residents in the poorest 1% census area in California was 76 years old, 11.5 years less than the wealthiest 1% census area, and the gap widened to 15.5 years by 2021.
Research report published in 22 by the National Medical College html said that the epidemic has not only exacerbated health differences between the rich and the poor, but also caused long-standing inequalities in income, housing and other social factors that determine people's health.
The report pointed out that in 2020, millions of Americans fell into poverty, and although government response policies played a certain role, social costs were not shared equally.
In the United States under the epidemic, the more difficult the people in need of assistance, the less they cannot reach various welfare measures. At the same time, the wealthiest class quickly expanded its wealth.
A social equality research project managed by the US Policy Institute recently released a report saying that among the 100 workers' wages, the lowest among the 100 S&P 500 index companies in 2020, 51 violated their previously set rules and increased executive salaries. Among these 51 companies, the average CEO salary increased by 29% in 2020 compared with 2019, and the median worker salary decreased by 2%, and the average ratio of CEO salary to the median worker salary was 830 to 1.
report said that since the outbreak of the epidemic, the wealth value of American billionaires has surged by more than $1 trillion. "Our corporate compensation regulations bring prosperity to the minority and turbulent lives to the majority."
Even so, the gap between the rich and the poor has not been paid attention to by American policy makers. As William Barber II, co-chairman of the Poor Movement, said, COVID-19, poverty and death are not the result of individual choices of the poor, but the result of the policy dominated by the rich.
Japanese economist: The United States is transferring difficulties and crises to the world
Xinhua News Agency, Tokyo, October 5th. Recently, the Federal Reserve has continued to aggressively raise interest rates, causing the yen to depreciate significantly against the US dollar, forcing the Japanese government to interfere in the foreign exchange market for the first time in 24 years. Hitomi Tada, chief economist of Japan Sigma Capital, said in an exclusive interview with Xinhua News Agency recently that it is not only Japan that is in trouble due to the US rate hike, but the United States is transferring difficulties and crises to the world.
Da Dai Hidetoshi pointed out that because the US dollar occupies a monopoly position in the global economy, especially in international trade, the result of the Federal Reserve hike in is that funds from all over the world flow to the United States, directly causing currencies depreciation and prices to rise in countries around the world. Some countries are forced to raise interest rates, and the economy is in trouble. It can be said that through interest rate hikes, the United States has passed on the difficulties it currently faces and the possible crisis in the future to the whole world.
He said that the sharp depreciation of the yen is not Japan, but the United States. The United States has missed the best window for suppressing inflation. Now, in order to solve the high inflation problem it faces, it has repeatedly raised interest rates despite the interests of other countries. The Federal Reserve has raised interest rates five times in a row this year and may continue to raise interest rates this year.
On September 21, Federal Reserve Chairman Powell attended a press conference in Washington. Xinhua News Agency (photo by Alexander Norton)
He analyzed that the Bank of Japan is trapped by the reality of weak domestic demand and weak economic recovery in Japan, and can only stick to the loose monetary policy beyond . The monetary policy of the Japanese and American central banks is opposite, causing the yen exchange rate to plummet. According to Bank of International Settlements data, in August this year, the actual effective exchange rate of in Japan has fallen to the level 50 years ago.
This is an electronic display screen showing the exchange rate information of the yen to the US dollar, taken on September 2 in Tokyo, Japan. Xinhua News Agency (photo by Gong Xiuxi)
He pointed out that Japan is suffering from the double impact of the sharp depreciation of the yen and the sharp rise in import prices. Because Japan is highly dependent on imports, the high import prices have put many Japanese companies in trouble. Ordinary Japanese consumers have to bear the pain of rising prices across the board.
column editor: Zhao Hanlu Text editor: Yang Rong Title picture source: Shangguan Title picture Photo editor: Cao Liyuan
Source: Author: Shanghai Securities News
