A Broke Nation: US Federal Debt Passes $33 Trillion
As if the economic news for the US couldn’t get any worse, the Treasury Department now noted that the US debt for the federal government surpassed 33 trillion dollars, an amount that no person can wrap their head around. Earlier this year it was 31.45 trillion and now (has not even been a full fiscal year) it stands at 33 trillion, if the rate continues I wouldn’t be surprised if we manage to get to 33.4 to 33.5 trillion in December.
This is on top of the fact that a government shutdown is coming on September 30th if both sides of Congress do not agree on a appropriations bill. So we’ve now raised the debt ceiling in June, couple of days later we hit the 32 trillion mark. Now 3 months later, we are looking at a similar situation except the debt is now 1 trillion larger than in June.
And this is not even mentioning the amount of interest that the government has to pay on maturing treasury bonds. We already pay close to 1 trillion dollars every year to service the debt, who is to say it doesn’t reach 1 trillion or more by the end of this year? And the Federal reserve is still seeking to hike interest rates one more time and keep it at 5% even until next year (unless a major financial crisis occurs that prompts the Fed to cut rates very quickly).
If the US government does not get its act together and cut its spendings drastically, we will soon be in a doom loop where as the interest gets higher, we take more money out to service the debt, the debt increase, the interest on the debt gets higher and so on. We might have to default on our debts at some point in the future. And this isn’t even taking into account if we have a recession or another GFC 2.0, who is to say the government does not just print out another 3-4 trillion to bail out banks or other large companies?