By News Room
The danger of recession is still not averted from the world. There are widespread indications of this in America. According to experts, America is getting trapped in debt crisis. The condition has become such that the debt of the federal government of America has reached 31.41 trillion dollars. In view of this, the Treasury Ministry of America has started taking emergency steps. However, there is a possibility of further deepening of tension between Republicans and Democrats. This indicates that the domestic situation of America is going to worsen.
Recently US Treasury Secretary Janet Yellen has warned the Congress regarding this. He said the debt crisis in the US could be severe if lawmakers do not extend or suspend the debt ceiling. Due to which America will not be able to pay the bills at the beginning of June 1. Dealing with which will be no less than a challenge. Global consequences of America getting into trouble can also be seen. Obviously the US economy has an impact on the world. Because in the era of globalization, such crises very quickly affect other countries as well.
Significantly, printing currency and issuing bonds have been two major policy tools to stimulate the US economy. Because of this, the dollar standard has evolved into a debt standard for the US. Significantly, in the last two decades, the legal debt limit has increased from $ 6.4 trillion to $ 31.41 trillion. By the end of fiscal year 2022, the US federal debt was $30.93 trillion, which was 121.5 percent of GDP. You can guess how much this amount is, as it is equal to the economic output of China, Japan, Germany and Britain combined.
Let us tell here that the debt limit is essentially considered to be the maximum limit of the total amount of debt of the federal government. It is a legal limit set by Congress and is used as an important means to limit the debt of the federal government. The debt ceiling covers 99 percent of the total amount of US federal debt, which includes publicly held debt and debt issued on accounts of the federal government.
The debt ceiling was set to prevent the federal government from borrowing more than it needed to. It was legally established in the year 1917. Since then, Congress has set limits on bond issuance through legislation. Nevertheless, the US debt limit is considered a symbolic limit, as the legal debt limit has been steadily increased with the expansion of the national debt. The way the economic and debt crisis is deepening in America, it is also an alarm bell for the world. Because different countries have a lot of dependence on America.
(Anil Pandey, China Media Group, Beijing)
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Source: America is getting trapped in debt trap
