American debt could bring down the world economy!

An imminent debt looms over the world's leading power, threatening to trigger a financial storm with global consequences. Some analyzes from the Congressional Budget Office (CBO) reveal that this debt is expected to reach a dizzying peak by 2030. Should this trajectory of the American economy shake confidence in the dollar as a reserve currency?

American economist: The dizzying escalation of the debt

The figures revealed by the CBO are chilling. By the end of the decade, the American public debt is expected to approach 106% of GDP, a level not seen since 1945. However, this spiral is not new. It finds its roots in the expensive budgetary policies of successive administrations. It starts with Trump's generous tax cuts. In addition, the economic recovery plans launched by Biden have considerably widened the deficit.

If American debt continues on this trajectory, the consequences could be devastating for the global economy. Indeed, a crisis of confidence in American debt, considered the safest asset, could cause a dizzying fall in the dollar. However, many countries hold significant reserves of greenbacks, their reserve currency. Such a devaluation would lead to massive financial turmoil globally. Additionally, investors could turn away from US Treasuries. This action risks causing a surge in interest rates and an overall economic slowdown.

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The political issues of budgetary reform

Faced with this imminent threat, bold measures to consolidate American public finances are necessary. However, political issues surrounding the 2024 presidential election risk complicating budget reform efforts. While Trump promises new tax cuts, Biden struggles to convince people of his ability to straighten out the books. This political paralysis could prove fatal, fueling a climate of global economic uncertainty.

In short, let us remember that the American debt does not only concern the United States. Because of their place in the ranking of the planetary economy, it will certainly reach the whole earth. If they fail to regain control of their public finances, the global economy is therefore threatened. It is therefore urgent that the international community join forces to avoid an unprecedented economic disaster.

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