US National Debt Rises Dangerously
A former deputy director of the International Monetary Fund (IMF) has raised concerns about the US national debt, which has been increasing at an alarming rate. Fresh data from the US Treasury Department reveals that the national debt has risen by over $474.930 billion so far this year, reaching a total of $34.465 trillion on March 8th.
Warning Signs from an Economist
Desmond Lachman, an economist who previously served as deputy director at the IMF, has highlighted the dangers posed by the surging national debt. In a recent blog post for the American Enterprise Institute, Lachman warns that the US government cannot continue to accumulate debt without consequences.
The Unsustainable Path
Lachman emphasizes that the current trajectory of US public finances is unsustainably dangerous. Despite strong economic conditions, the budget deficit is around 6% of GDP. The Congressional Budget Office predicts that these deficits will push the public debt to over 125% of GDP, surpassing levels seen after World War II.
Potential Consequences
If drastic measures are not taken to address the growing debt, Lachman warns that there could be severe consequences for the US government and economy:
Bailouts and Money Printing
Lachman highlights that since the US government borrows in dollars, it can rely on the Federal Reserve to print money to cover its deficits. However, this excessive money printing could lead to a dollar crisis and a surge in inflation. Furthermore, it could result in financial market turmoil and a potential return of bond market vigilantes.
Closing Thoughts: A Dangerous Path Ahead
The rapid increase in the US national debt is a cause for concern, as highlighted by former IMF official Desmond Lachman. Without significant action to address this issue, the consequences could be severe for the US government and economy.
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