Again about the national debt

I have just recently shared my thoughts on the likely crisis associated with the growth of global, and especially American, public debt.

As it turned out, the head of BlackRock said the same in a letter to the shareholders. JPMorgan Chase and the Bank of America, as well as the Chairman of the Federal Reserve, have joined the Alarmist Club.

Jamie Dimon, CEO of JPMorgan Chase eloquently called US public debt the "most predictable crisis" that could lead to severe consequences: loss of homes, savings, and national security.

Until recently, warnings about the impending crisis sounded like a private opinion of individual experts. They have now attained almost official status.

Reports submitted by the Congressional Budget Office and U.S. Government Accountability Office present a bleak picture of the debt situation. The current level of debt was 99% of GDP. The same ratio used to exist during World War II, when the country had to bear heavy military expenditures. Then the debt situation was successfully resolved, which was facilitated by the post-war economic boom.

Now boom is not expected, so it is difficult to expect a quick improvement of the situation.

The reports were critical of the government’s fiscal policy. This is not surprising: the annual budget deficit is approaching $2 trillion. According to the announced plans, there are no ideas to reduce costs, moreover, there are persistent complaints about the deterioration of the infrastructure, which means additional cost increases. Of course, given the global situation, military expenditures are expected to increase. The need to combat inflation implies an increase in interest rates and in the cost of debt servicing.

In the long run, I view the situation as hopeless and the crisis as inevitable. 

The economic crisis will not be the most negative event. Often such crises end in wars, and this must be avoided by all means.

#NationalDebtCrisis #EconomicAlarm #DebtDisaster #FiscalPolicyFail #AvoidingEconomicCollapse