When the world's attention focuses on when the US Federal Reserve cuts interest interest rates and the hot -aged presidential election news, the US Ministry of Finance recently released the news of further expanding the federal government budget deficit.As an important data for measuring the scale of US debt, the deterioration of the budget deficit has continued for a while. In this regard, the market has different views.However, as the probability of Trump's election at the end of the year is not low, whether the scale of US debt will evolve into a major crisis in the future, and it has begun to receive more and more attention.
According to the data released by the US Treasury, the federal government budget deficit in May was US $ 347 billion (about S $ 468.5 billion), which was significantly increased compared with the US $ 240 billion in the same period last year, and it also exceeded the market estimated 250 billion yuanThe US dollar is mainly due to the increase in some June benefits, as well as increased interest, social security and defense expenditure.
The federal government budget deficit has deteriorated. As early as 20 years ago, Bush Bush had already appeared during the president, and it has not caused an economic and financial crisis to now, so that when this type of data was released, it was calm.From time to time, the two parties promised to reduce the budget deficit. The Republican Party tried to prevent the federal government from raising the upper limit of debt in the term of office of the President Obama and the current President Biden.Decrease deficit.
In fact, the current public opinion is different from the 1990s. At that time, the polls often showed that the budget deficit was one of the most concerned issues that voters were most concerned.President Clinton got a budget surplus to the second term.Unfortunately, to this day, the budget deficit is no longer a major issue that American voters care about, and the two parties lack their willingness to carry out cooperation and strive to reduce the expansion of deficit.
The continuous expansion of budget deficit has also reflected the increasing deterioration of US debt.Data from the Ministry of Finance in May showed that the net interest expenditure of US debt has surged to national defense expenditure by the deterioration of deficit and high interest rates.
U.S. Treasury bonds are currently about 34 trillion US dollars, which is equivalent to the total economic value of China, Germany, Japan, India and the United Kingdom; whether it is worth worrying about and urgently needed, there are still different opinions.Famous economist Crugman believes that the scale of U.S. Treasury bonds is not fear and is completely sustainable.The scale of the US economy is huge, and the proportion of debt on GDP (GDP) is not much higher than the level at the end of World War II, and it is not higher than the proportion of World War II during World War II.The debt issue is actually a political issue, not an economic issue.
But there is no suspense that the US debt and interest to be paid will only increase.The U.S. Congress Budget Office predicts that in the next 30 years, the ratio of debt to GDP in the United States will increase from the current 96%to about 166%, and the debt burden is now rising due to interest rates, which is further aggravated.In the 20 years before the crown disease epidemic, interest payment accounts for about one -third of the federal deficit each year.The Congress Budget Office estimates that in the next 20 years, interest may account for two -thirds of the deficit every year.
Because of the lack of debt issues, the International Monetary Fund (IMF) and international rating agencies believe that the US government can ignore this problem.IMF estimates that by 2029, the United States will have to cut expenditure. If it does not include debt interest, it may be increased to 4%of GDP to stabilize the ratio of debt to GDP.It also warns that the scale of US loans is so large that it is endangering global financial stability.Two credit rating agencies St. S & P and Fitch, also lowered US debt rating due to the huge US debt; the third Moody's threatened will also threaten it.
Of course, the US dollar is still the world's reserve currency. It has strong demand worldwide. All debt in the United States is denominated in the US dollar. It is probably alarmist to say that the bond market will have a crisis in the United States.Although the Fed will no longer buy U.S. Treasury bonds in accordance with the earlier quantitative easing plan, it is now gradually reduced, but generally believes that when necessary, the Fed can still act as the last buyer.Essence
Doesn't US debt cause problems or even crisis?This is probably dependent on the degree of out of control in the future.Whether it is Biden or Trump's victory at the end of the year, the market will not be optimistic about the future prospects of US debt.Both candidates dare not make opinions on the expenditure of cutting medical care and pensions for the elderly.These expenditures account for a considerable share of federal budgets and will grow with the aging population.
Dalio, founder of hedge fund Qiaoshui Investment, predicted in an interview with the Japanese Economic News last week that if Biden was elected again, fiscal expansion will continue; Trump will continue to reduce taxes.No matter who is president, the United States will face huge fiscal deficits.
Biden is re -elected, and may levy more taxes on the rich and powerful people and increase the company's tax, but it will also greatly increase support, including restoring generous tax credits for children with children, for children, for childrenConservation provides funds to avoid students' debt, so it is unlikely to increase all taxes to reduce deficit.If Trump's victory will be permanently implemented to permanently, and in order to offset the reduction of taxation, it will comprehensively impose tariffs on imports.
It is not difficult to see that Biden and Trump's policy are the same -fiscal loose -all do not help curb the expansion of the federal budget deficit and even the debt scale.I am afraid that higher returns will begin.This will push the federal government's interest bill.If the U.S. government is also forced to print money to make up for the deteriorating deficit, it will also cause inflation to rise and weaken economic growth.In other words, if the US debt is not well controlled in the future, a series of problems or even crisis will still be derived.
The author is a local current affairs commentator
