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Will the United States enter the dark tunnel after the debt jump?

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Will the United States enter the dark tunnel after the debt jump? Empty Will the United States enter the dark tunnel after the debt jump?

Post by claud39 on Sun Feb 17, 2019 6:12 am

http://economy-news.net/content.php?id=15424



Will the United States enter the dark tunnel after the debt jump?




17/02/2019





Will the United States enter the dark tunnel after the debt jump? 13042





Economy News Baghdad



The American debt train is not stopping but is growing. The US Treasury figures come every month to carry a new increase and an additional burden on the world's largest economy.
According to US government data, total public debt in the United States reached a new record high by the end of February 11 to 22.01  trillion dollars, the highest since World War II.
On a year-on-year basis, the US public debt jumped by $ 2 trillion, hitting $ 20.6 trillion on February 12, 2018.
Last year alone, US public debt increased by $ 1.5 trillion.
This huge sum is divided between the federal government funds owed to itself and the money owed by the government to all other parties.
The first type is known as government debt and is often owed by the Treasury to funds such as social security, which is less worrying.
The second type is the debt held by the public, which can affect the economy by inflaming inflation or competing private investment.
At present, US public debt is $ 16.17 trillion, equivalent to 76 percent of GDP, while non-government debt is $ 5.86 trillion.
Bringing the total US public debt to GDP to 80%.
Although there are countries with higher GDP ratios such as Japan, Italy and Greece, the US rate remains high, with Washington spending $ 325 billion in net interest on debt in 2018, with the figure expected to jump to $ 383 billion this year. Reaching $ 928 billion in 2029.
The jump in the US debt rate is not the first of its kind. During Barack Obama's presidency, the US debt increased from $ 11.1 trillion to $ 19.85 trillion, albeit to improve the economy after the recession that followed the global financial crisis.
President George W. Bush led the debt increase from $ 5.77 trillion to $ 11.1 trillion in the midst of his war in Iraq.
The reason for the rise in debt during the Trump era is that the stimulus package of the economy is varied through the tax cuts, with estimates that the program will add $ 1.9 trillion to the national debt.
Congress also increased spending on military and local programs in the spending bill, which exceeded $ 1.3 trillion.
Not only that, the aging population has increased what has necessitated increased spending on health care, and increased burdens on social security.
 Is this increase a threat to the US economy?
A historical point of view suggests that an increase in the debt of the world's largest economy is not particularly frightening as a result of the role of the dollar in the global financial system. The US can borrow as much as it wants and at very low interest rates.
At the same time, however, others believe that these levels of debt could threaten the economy during future downturns and that the current period of economic growth is the best time to control things.
The United States pays interest on debt, and these payments rise as debt mounts even if interest rates stabilize at the same level. Over the next few years, interest payments are expected to increase at an accelerated pace and reach unprecedented levels since the 1990s.
According to US government data, more will be spent on debt benefits than on farm and industrial programs or even health care programs for the poor.
Increased borrowing in periods of strong economic performance is dangerous, as the US reduces its option in the next downturn, and with much of the federal budget devoted to interest payments, this leaves less room for other spending. 
 There is another aspect of the damage the United States may suffer from these debts, but this is not in terms of interest or debt accumulation but the inability of the United States to take advantage of this debt, according to a CBS report.
Economists point to this view by comparing spending on infrastructure with the need to pump money, feed employment and trade, or even put some money in a contractor, and between interest spending that does not lead to anything like that, but simply covering the costs of decisions taken from A long time ago.
Government borrowing in the world's largest economy also has its negative effects on private spending, as the more money the government borrows, the greater the pressure on private borrowing.
William Gale, co-director of the Center for Tax Policy and a senior fellow at the Brookings Institution, says borrowing more raises demand for loans, so the government is competing with companies, students and anyone in the market for loans.
If the government wanted to borrow more, it would raise interest rates for everyone else, he said.
Keith Hall, an official at CBO, said it was still worth raising debts if the government spent money generating more economic returns than the cost of credit.


Source: Mubasher
claud39
claud39
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