America's debt crisis: Trump's policies endanger the global financial system!

America's debt crisis: Trump's policies endanger the global financial system!

The US debt situation is becoming increasingly worrying. Currently, US debt amounts to almost $37 trillion, which corresponds to around 122% of economic output. These alarming figures raise questions about fiscal policy in Washington and threaten investor confidence in the country's creditworthiness. Moody's has reportedly downgraded its sovereign debt rating, and the US does not have top ratings from any of the three major rating agencies.

The situation is further exacerbated by the persistent dissatisfaction among investors, which is reflected in a decline in confidence in US government bonds. As a result, 30-year Treasury yields have risen above the psychologically important threshold of 5%. [n-tv] reports that Trump's budget deficit and tax policies pose a serious threat to the US's creditworthiness.

Rising interest rates and political uncertainty

Rising market interest rates are making loans more expensive for consumers and companies. Analysts also warn of possible stagflation, which could be caused by geopolitical risks and deficits. The increase in debt has been encouraged over the last 20 years by tax giveaways, bank rescues and economic stimulus packages.

Republicans under Donald Trump are trying to push a major tax cut program through Congress that could add another $4 trillion to the national debt. This could increase the budget deficit to 7% of economic output. Another critical point is that by 2035, almost a third of tax revenue could be used to service debt.

Loss of trust and market reactions

Declining confidence in U.S. creditworthiness risks destabilizing the global financial system. The Federal Reserve has large amounts of U.S. Treasury bonds that it would like to expire, underscoring the urgency to stabilize markets. [Financial Market World] highlights that investors are increasingly questioning the sustainability of the US debt burden. The latest 20-year US Treasury bond auction was weak, with yields jumping to 5.10%. The S&P 500 and Nasdaq are also affected by these developments, with declines of 1.6% and 1.34%.

In summary, US fiscal policy decisions and the inability to find a political consensus to end borrowing continue to fuel current market uncertainty. The need for reforms to regain investor confidence and ensure economic stability is becoming increasingly urgent.