In a mere two years, the United States debt has massively grown. In fact, the amount of debt the US incurred equaled the size of the entire Brazilian economy.
U.S. government debt is on track this year to rise at the fastest pace since 2012,reported the Los Angeles Times. The strong yet quickly weakening economy is failing to keep pace with the wave of red ink that’s rising under the Trump administration and there appears to be no end to the spending in sight.
The total public debt outstanding has jumped by $1.36 trillion, or 6.6%, since the start of 2018, and by $1.9 trillion since President Trump took office, according to the latest Treasury Department figures. The latter figure is about the size of Brazil’s gross domestic product.
As of Monday, the nation’s debt stood at a record $21.9 trillion. The borrowing is needed to cover a budget deficit that expanded by an estimated $779 billion in Trump’s first full fiscal year as president, the widest fiscal gap in six years, since Barack Obama’s term. By the end of Trump’s first term, the debt is expected to rise by $4.4 trillion despite historically low unemployment, relatively low interest rates and robust growth.
Government funding for some agencies runs out after December 21 barring an agreement over the budget, while the statutory debt limit has been temporarily suspended through March 1, though the Treasury can take measures to keep paying the government’s bills for a few more months.
Without extreme debt conditions, economic downturns cannot be created (or at least sustained for long periods of time). According to the amount of debt weighing down a system, banking institutions can predict the outcomes of certain actions and also influence certain end results. For example, if the Fed was interested in conjuring a debt based bubble, a classic strategy would be to set interest rates artificially low for far too long. Conversely, raising interest rates into economic weakness is a strategy that can be employed in order to collapse a bubble. This is what launched the Great Depression, it is what ignited the crash of 2008, and it is what’s going on today.
– Brandon Smith, Alt-Market.com