US Economy - Debt Situation In America
still at critical level
The
US debt amount is the largest in the world. The country and also the
people have been trying to bring down their debt levels but the debt
situation is still at a critical level. US debt has now reached over
a staggering $14 trillion- the sum owed by the federal government.
The US debt level is so high that it is now 95% of the GDP which is up from 51% of the GDP in 1998. The country will have to now work seriously towards debt reduction or soon the debt ceiling will be reached.
The US debt level is so high that it is now 95% of the GDP which is up from 51% of the GDP in 1998. The country will have to now work seriously towards debt reduction or soon the debt ceiling will be reached.
The debt situation in 2011 year
The
treasury department of America is of the opinion that if Congress
does not act soon, the country will soon hit the debt ceiling. The
financial experts believe that the nation will reach the borrowing
limit within April and May of this year (2011).
So, the treasury officials believe that if the Congress does not pass a bill on increasing the debt ceiling, the nation might have to increase the taxes and also cut spending in order to achieve debt reduction.
So, the treasury officials believe that if the Congress does not pass a bill on increasing the debt ceiling, the nation might have to increase the taxes and also cut spending in order to achieve debt reduction.
Government
debt is an accumulation of the government’s budget deficits. Year
after year, the government has been cutting down on taxes and has
increased on spending.
Usually, the holders of the debt want larger interest payments so as to compensate on those which they perceive as having an increasing risk that these won't be repaid.
The added interest payments expense usually forces the government to keep the debt within more or less reasonable limits.
Usually, the holders of the debt want larger interest payments so as to compensate on those which they perceive as having an increasing risk that these won't be repaid.
The added interest payments expense usually forces the government to keep the debt within more or less reasonable limits.
So,
the consequences of the failure to increase the debt ceiling level
are high. Any threat to the nation’s ability to pay back the debts
or the loans can have a devastating effect on the nation so very
dependent on the debt.
Not only will it be cut off from the future loans, but also the interest rates would increase, and the markets in the country would suffer badly.
Not only will it be cut off from the future loans, but also the interest rates would increase, and the markets in the country would suffer badly.
Though
the US economy has seen unprecedented growth in the third quarter of
the year 2010, this little bit of encouraging news was spoiled as a
result of the latest housing reports by the Federal Reserve.
As per the reports by the Federal Reserve, the rate of joblessness and unemployment is going to remain at 9% throughout in 2011. Moreover, there are not even any possible chances of the unemployment rate to decrease in the recent years.
As per the reports by the Federal Reserve, the rate of joblessness and unemployment is going to remain at 9% throughout in 2011. Moreover, there are not even any possible chances of the unemployment rate to decrease in the recent years.
So,
the people might not still be able to fully work towards their debt
reduction and might need some help from the government. But,
unfortunately enough the government too might not be in that good a
position to help all if the debt ceiling is not raised.
Tags :
debt
reduction
Copyright 2010-2011 by Dariusz Kudłaty
