US Debt Crisis - will this get out of control (03 Apr 2023)
From Twitter User The Kobeissi Letter
Total U.S. Debt by Year (Inflation Adjusted):
- 1920: $400 billion
- 1930: $300 billion
- 1940: $900 billion
- 1950: $3.2 trillion
- 1960: $2.9 trillion
- 1970: $2.8 trillion
- 1980: $3.2 trillion
- 1990: $7.2 trillion
- 1995: $9.6 trillion
- 2000: $9.7 trillion
- 2005: $11.8 trillion
- 2010: $18.4 trillion
- 2015: $22.6 trillion
- 2020: $30.7 trillion
- 2022: $31.5 trillion
On an inflation-adjusted basis, it took the U.S. 224 years to hit $10 trillion in debt.
In the last 20 years alone, over $21 trillion in debt has been added.
Meanwhile, U.S. debt is expected to hit $51 trillion by 2033, adding another $20 trillion in 10 years.
Debt crisis is an understatement.
My investing muse
USD is the current world reserve currency.
If they continue to have debt ceiling issues, this erodes the confidence in their currency. Will the other countries continue to be US-issued bonds? What happens when the US is unable to fulfil the interest payment of their bonds in a timely fashion? Will the world turn to the Eurodollar, Japanese Yen JPY or Chinese RMB instead?
There is a drive for the de-dollarisation of the USD. Recently, France (a long-term ally of the US) closed a deal to purchase LNG in Chinese RMB. The international demand for USD is being eroded by the current administration as BRICS ponder a new currency. There is much more headwind coming for the USD as they continue to pile up debts. Austerity is needful for the USA as this will lead to a more inflationary impact.
Any business manager who is unable to keep within their budget would be removed eventually. Should this not apply to the US government?
The US needs to realize that its domestic handling will also affect its international standing. Citizens first, the rest should wait. Sending $2.6B to Ukraine is disheartening when healthcare, costs of living, gun violence, police brutality, and homelessness trouble your citizens.
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