What s going on in the U.S. Debt Crisis 5, What s going on in the U.S. Debt Crisis

That is to say, the United States issues some valuable ** that is, U.S. bonds to other countries, which is equivalent to borrowing money from other countries, and then repaying it to other countries with principal and interest after maturity. The U.S. debt crisis is the imminent default of the U.S. debt. The U.S. may take a debt ceiling lift to resolve the debt crisis, which will eventually lead to a depreciation of the dollar, which will affect the Chinese economy and lead to inflation in China.

The logical relationship of this question goes like this:

1. Why does the United States borrow so much debt?

The root of the U.S. debt crisis is why does the U.S. owe so much debt?

Because during the subprime mortgage crisis, the United States ** bought the toxic assets of banks (about trillions), what to buy? The issuance of dollars, but so many dollars to the market will cause hyperinflation, so the issuance of trillions of US bonds to recover liquidity. (In this way, the banks are freed and inflation is not stopped, the dollar is weighed down, the US export competitiveness is strengthened--- manufacturing is saved, and unemployment is reduced).

1) Issuance of dollars - this is where 2 QE comes in.

2) Issuance of U.S. bonds - recovering dollars to spend.

Now it seems that ** is leaning towards the second option (there are not many people in favor of the Fed's third QE).

2. What can I do if I raise the upper limit?

The ceiling has been raised, and the United States** can continue to issue Treasury bonds, that is, it can continue to raise money to spend, and without printing dollars, inflation can be avoided.

Therefore, raising the ceiling is to issue more Treasury bonds.

3. How to repay the multi-issued national debt?

It's not good to pay it back, or the Republican Party is asking for a reduction in the budget deficit, which means that this is a real thing to be paid back in the future, not by printing dollars. We can note that the deficit to be reduced is very close to the amount of government debt to be issued.

4. Is the new one used to pay off the old one?

It can be said that some of them may be, but the United States is now directly facing the drying up of cash flow (everyone estimates that the daily pass is not enough, and there may be a shortage of cash on the books on the same day - a large amount, which can be found on the Internet), so most of it is spent in exchange for money, rather than paying off old debts. It is not excluded that a small part will be used to repay the due repayment.

I don't know if I can make it clear.

What will happen to the U.S. debt crisis?

According to U.S. media reports, after months of difficult negotiations, both houses of the U.S. Congress recently passed a bill to raise the federal debt ceiling in the short term, temporarily avoiding a "catastrophic" debt default. Experts have pointed out that raising the US debt ceiling is only a delaying measure, and it does not really correct and eliminate the risk of US debt default. In the context of the new crown pneumonia epidemic, the US debt crisis may drag down the recovery process of the US and the world economy.

The debt ceiling is the maximum amount of debt that the U.S. Congress has set for the federal government**. Hitting this "red line" means that the U.S. Treasury has exhausted its borrowing authority, and Congress needs to raise the quota or temporarily lift the quota limit before it can continue to issue bonds. Statistics show that between 1960 and 2017, the U.S. Congress raised the debt ceiling 78 times to cope with the embarrassment of making ends meet.

With the high inflation in the United States not falling but rising, many countries have sold off US bonds, and the scale of US bonds has even soared to 31 trillion US dollars. When Japan saw this, it immediately urgently sold the $2 billion US debt in its hand in order to ensure that its own economy would not be greatly affected. China, as the second largest creditor of the United States, has been continuously ** US bonds, but at the juncture of Japan's sell-off, it "unexpectedly" bought 2.2 billion US bonds, because China needs to further curb the growth of CPI in order to reduce the impact on the market and **.

The direct consequence of the high commute rise in the United States is that its own debt scale has risen to 31 trillion US dollars, and after breaking through the 30 trillion mark in 2020, the Federal Reserve has adopted a large water release policy, which has directly exacerbated the vicious development of the US economy, making the scale of US debt soar all the way, approaching the 31 trillion mark. Seeing that the debt is increasing, the United States is not panicking, and it is passing on the crisis to the outside world through the way of US debt, which is bitter for the countries that buy US bonds, and they have to be forced to help the United States repay its debts.

Japan first smelled the smell of "conspiracy" and hurriedly sold off its $2 billion in US bonds in order to avoid the crisis. However, Japan is not the largest creditor country after all, and the share of overseas investors accounts for most of the U.S. bonds that are directly purchased by relevant ** and banks in the United States, and even the Federal Reserve itself holds 5 trillion yuan of U.S. bonds. So Japan ** did not have much of an impact.

China, as the second largest creditor of U.S. bonds, began to repurchase from April to June 2022 after seven consecutive months, and the reason for this is also because other European countries are also increasing their holdings of U.S. bonds, among which Canada has increased its holdings by more than $20 billion in a single month. As a world currency, the value of the US dollar itself is closely related to food, housing prices, oil, etc., if the Federal Reserve continues to raise interest rates to curb inflation, it will also reduce the growth of CPI curb, and the negative effect on the economy will be much smaller, which is also beneficial to China. After all, it is still worthwhile to reduce the development risk of various industries by increasing the number of U.S. bonds.

If the debt ceiling is raised, I am afraid that it will not be able to repay it in the coming year, and the current debt ceiling of the United States is set according to GDP, so it is difficult for the United States to ride the tiger this time.

It is true that there are too many US national debt.

Once the debt gets out of control, then the US will raise interest rates, the dollar will depreciate, and the global financial crisis will happen again.