The debt of the United States exceeds 35 trillion dollars and generates concern about the economic consequences that there could be worldwide.
In this framework, the International Monetary Fund (IMF) urged the authorities of the main financial power to take action on the matter to address the problem.
During the annual meeting of the organization and the World Bank in Washington, Vitor Gaspar, IMF economist, express: “This can’t go on forever.”
Likewise, the official mentioned the presidential elections on November 5 and asked the future president to implement decisive actions to avoid a global crisis.
Debt reflects the amount of money that the Federal Government owes to creditors, both local and international, and generates concern because it indicates a high and continuous level.
In this regard, analysts of the financial newsletter The Kobeissi Letterindicated that the debt increased 473 billion dollars in the last three weeks. “This means that the United States has assumed a debt of $1,450 for every American, just in the last three weeks,” they noted and added: “Unsustainable is an understatement: something must change.”
The public debt of the United States exceeds 35 trillion dollars. Fountain: The Kobeissi Letter.
High debt implies that the United States government must raise taxes and reduce public spending in key sectors such as health, infrastructure or education, to allocate those resources to the payment of interest. These measures could limit the economic growth of the main financial power.
If investors see debt continuing to grow despite a package of measures, they are in a position to demand higher interest rates to finance the US government. The equation is simple: This will inevitably lead to an even greater increase in debt and a significant increase in the interest rate.which makes credit more expensive for households and companies.
According to data from The Kobeissi Letter, the budget deficit increased by 6.3% in the third quarter of 2024, from 5.6% in the second quarter, a new high for the year. That is, the United States is spending more money than it collects in a fiscal year, through taxes and other revenues. To cover this difference, borrow and the debt continues to expand incessantly.
In the following graph, you can see the unemployment rate (blue curve) and the budget deficit (red line), as well as a red circle indicating that the deficit rose 6.3%.
Budget Deficit and Unemployment Rate in the United States from 1970 to 2024. Source:The Kobeissi Letter.
For analysts, this reflects that the debt was intended to protect employment in the United States and thus avoid a recession. In other words, without that additional expense, you may unemployment would have risen to levels similar to those of the COVID-19 pandemic.
Why does it impact globally?
In his report, Gaspar pointed out that the United States does not face difficulties in financing itself in the markets thanks to the strength of the dollar as a reserve currency. However, a rise in interest rates as a result of This high debt impacts the entire world.
What happens is that many countries, especially developing ones, have reserves in the North American currency and any uncertainty could generate fears about the stability of the currency. An increase in debt, without an adequate management plan, generates greater volatility in global markets.
The lack of confidence in the dollar as a reserve currency could lead countries to bet on other assets such as gold and Bitcoin/”>bitcoin (BTC) in times of economic uncertainty, high inflation and not being exposed—directly—to government decisions.
Bitcoin, as a refuge from the crisis
Paul Tudor Jonesconsidered one of the best traders in the world, gave an interview on the CNBC network and expressed concern about the high levels of debt in the United States. He said:
“All roads lead to inflation, historically it is the way all civilizations have gone: they have inflated their debts.”
Paul Tudor Jones, founder of the hedge fund Tudor Investment Corporation.
In that sense, he noted that “we are going to go bankrupt very quickly unless we take our spending problems seriously.” While highlighting that it counts with gold and BTC in your investment portfolio to not be exposed to a potential crisis on a global scale.
As CriptoNoticias has reported, the digital currency created by Satoshi Nakamoto has a total supply set at 21 million, which marks a difference with fiat money, which is constantly devalued due to inflation due to issuance by central banks. The same goes for others cryptocurrencies either tokens They have no restrictions on creating new units.
Its inherent scarcity is what generates institutional interest and in small investors, in times of economic uncertainty or geopolitical conflicts.
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