Economic History—but Not Yet Financial Markets—Sounds an Alarm on American Debt Levels
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The Congressional Budget Office (CBO) projects annual budget deficits approaching $2 trillion in the coming years. By 2034, the CBO projects the national debt will exceed $50 trillion, or 122 percent of GDP. Historical examples show that unsustainable borrowing and spending can lead to economic instability and loss of global influence. J.H. Cullum Clark, an expert on the historical relationship between debt and geopolitical power, warns that even dominant nations can fall victim to debt-induced crises. However, history also suggests that there will be warning signs before the United States loses control of its finances. A recent research note from Capital Economics explains how in the early 1990s, the US experienced a significant increase in bond yields, which put pressure on the government's fiscal policy. If the US elections result in leaders who are happy to continue the current fiscal path, the bond market could remind them sharply that they still need to address the debt issue.
#Debt #BudgetDeficits #GeopoliticalPower #BondYields #FiscalPolicy
https://www.aei.org/economics/economic-history-but-not-yet-financial-markets-sounds-an-alarm-on-american-debt-levels/
American Enterprise Institute /
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2024-06-24 21:02:33
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2024-06-24 21:02:33Event JSON
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"content": "Economic History—but Not Yet Financial Markets—Sounds an Alarm on American Debt Levels\n==========\n\nThe Congressional Budget Office (CBO) projects annual budget deficits approaching $2 trillion in the coming years. By 2034, the CBO projects the national debt will exceed $50 trillion, or 122 percent of GDP. Historical examples show that unsustainable borrowing and spending can lead to economic instability and loss of global influence. J.H. Cullum Clark, an expert on the historical relationship between debt and geopolitical power, warns that even dominant nations can fall victim to debt-induced crises. However, history also suggests that there will be warning signs before the United States loses control of its finances. A recent research note from Capital Economics explains how in the early 1990s, the US experienced a significant increase in bond yields, which put pressure on the government's fiscal policy. If the US elections result in leaders who are happy to continue the current fiscal path, the bond market could remind them sharply that they still need to address the debt issue.\n\n#Debt #BudgetDeficits #GeopoliticalPower #BondYields #FiscalPolicy\n\nhttps://www.aei.org/economics/economic-history-but-not-yet-financial-markets-sounds-an-alarm-on-american-debt-levels/",
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