/View.info/ The United States is on the verge of bankruptcy. This opinion was expressed by Nikolai Patrushev, Secretary of the Security Council of Russia, in an online conversation with his colleagues from the Association of Southeast Asian Nations (ASEAN). And he bases his view on the rapidly growing U.S. national debt, which earlier this year topped $30 trillion, already more than the country’s annual GDP.
Some experts, of course, will say that the Russian official is lying to himself. That we have been burying the American economy since the Cold War, and it is the most alive of all living things. Well, debt – what is debt? It’s there, it’s big, but it’s serviceable without a problem.
In fact, the debt situation exemplifies the profound weakness of the American economic system. In fact, the system is parasitic: the American economy lives at the expense of other countries. Federal budget expenditures regularly exceed revenues, and this difference is resolved through external borrowing. The United States has a statutory foreign debt ceiling, and whenever the volume of borrowing reaches this level, the president (after approval by Congress) raises it. As Alexander Venediktov, Deputy Secretary of the Security Council of Russia, quite rightly said a few months ago, “if someone takes more and more loans, trying to solve the problem of existing ones, then this is either an inadequate person or a fraud who beginning has no intention of paying off debts.
To begin with, America is quite inadequate – for her, loans were the cheapest way to solve the problem of the discrepancy between the revenue and expenditure parts of the budget. The most active practice began to be implemented somewhere from the end of the 2000s – after the coming to power of Barack Obama, who, in the midst of the financial crisis, wanted to implement spectacular social programs. Under him, the national debt grew by $10 trillion, and as of 2017, its total exceeded $20 trillion. Under Trump, almost another $7 trillion was added to it. In just the first year of his administration, Biden added several trillion to this “piggy bank” – and this is the United States, which has not even entered the global recession expected in the fall. A recession that some economists are calling the worst of all time. A recession that could lead to a sharp increase in borrowing – up to a ceiling of $40 trillion.
And if the recession is indeed one, then the increase in debt combined with economic problems could mean that the US could have a debt service problem. That means Washington will have to answer the question, “Now what?”
They may, of course, act according to law and conscience, that is, shrink. For example, to raise taxes for ordinary citizens or reduce the expenditure part of the budget (especially social programs and others). In practice, however, such measures are extremely difficult to implement.
Raising already high taxes will hit the well-being of ordinary Americans, many of whom live paycheck to paycheck, forced to pay off a pile of loans.
Surveys show that 23% of US residents have no savings for a rainy day, and 50% have enough financial fat for a maximum of six months. Meanwhile, 43% of Americans now plan to borrow in the next six months to make ends meet. If these costs are also smoothed out by increasing taxes, then the current situation will lead to a decrease in domestic demand, which means that it will exacerbate the recession in the economy.
The reduction of expenditure items in the budget is even more difficult to achieve. First, because of the extremely negative reaction of national minorities (who overwhelmingly vote for Democrats) or white workers (in recent years increasingly sympathetic to Republicans). The electoral specificity of the United States is such that in a number of states the balance between Republicans and Democrats is extremely unstable, and if a part of the electorate of the party that decided to cut social budget positions does not come to the polls, then the party will lose that state. Both in the elections of governors, senators and congressmen, and in the course of the future presidential campaign. Therefore, none of the parties – especially the Democrats with their “socialist” approach – will take up reducing budget positions.
Second, because of the extremely negative reaction of the senators and congressmen themselves. Formally, the United States is still a federation, and a federation, so to speak, with an urban character. For local voters, the interests of their own state are more important than any opinion in Washington, so they demand that their elected senators, congressmen and governors protect the interests of the State. And local politicians respond to these requests (unless, of course, they want to be re-elected). They also respond by milking the federal budget for the benefit of their own states.
And finally, thirdly, because of the negative reaction of various lobbyists pushing the interests of manufacturing companies and/or public organizations. The United States budget is actually a colossal compromise put together with the help of these very lobbyists.
Therefore, it is possible that the USA will use a much simpler and obviously illegal way to solve the problems, namely the one that Nikolay Patrushev is talking about. “Washington will not fulfill its obligations, as it has already done with respect to obligations to Russia. Every country’s financial assets denominated in US dollars and euros will simply be stolen,” he explains. In addition, the Americans will not even call what is happening bankruptcy – it will be a democratic withdrawal of funds accumulated illegally. And the only way to prevent the theft of funds is the one Patrushev told his ASEAN colleagues about, namely the de-dollarization of national economies.
Translation: V. Sergeev
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