Public debt and America's long-term problem

Hạ Lang |

The US government officially confirmed that the US public debt has exceeded the $40,000 trillion mark. Along with public debt, interest payments and the level of budget deficit have also escalated. Notably, there are 3 things here.

First, all three indicators above are very large in absolute value. Second, this increase is very consistently continuous, despite all presidential changes in the US. Third, US presidents, including incumbent US President Donald Trump, all intentionally increase public debt to take power, not to reduce public debt while in power.

They are all pursuing ruling programs that can only succeed by increasing the level of public debt. On the other hand, it is very likely that they are not intentionally reducing public debt because they are aware that capital cannot reduce public debt. Current public debt in the US is the result of a long process. Mr. Trump and his predecessors are not the authors of this situation but have all participated in increasing the seriousness and difficulty of the US public debt problem.

Public debt is like that and will continue to increase, but the United States is not at risk of default and bankruptcy, because the United States owns the USD. This currency plays a leading role in the world in international payments and foreign exchange reserves of countries. But in the long run, it is very likely to become one of the fatal weaknesses for this superpower.

It is the clearest manifestation of the unstable, sustainable and risky situation of the US financial and monetary system. This state financial overload limits the capacity and narrows the scope of US domestic and foreign political activities. It encourages partners to strengthen efforts to reduce the level of dependence on the US dollar, promote the process of dedollarization in international foreign economic relations, and seek bilateral and multilateral international payment methods and tools that do not use the US dollar. Although time is still needed, these developments will bring results and then their synergistic effects will be large enough to force the US to pay a very heavy price for allowing public debt to continue to increase as it is now.

Hạ Lang
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