The debt "bomb" planted by the United States for itself

The US federal government is facing a severe financial challenge. At present, financial expenses have become the third largest expenditure item in the monthly budget, as Congress and the White House have squandered $34.4 trillion in national credit card debt. With the rapid growth of federal debt in the past few years, the Treasury has to pay over $1 trillion in interest annually to repay the debt, which does not include the principal amount of the debt, and this number has already exceeded the government's expenditure on military projects.

Firstly, in fact, interest expenses have exceeded almost all items in the monthly reports of the Ministry of Finance, except for the Social Security Administration and the Ministry of Health and Human Services. However, even these projects will face inevitable cuts in the coming years. It's like a family's credit card interest exceeds all other budget items except rent and food, such as car expenses, utilities, and medical expenses.

Secondly, even worse is the severe monthly budget deficit of American households. Before considering credit card interest, they are no longer able to bear all expenses; Now, the situation has become even worse. Allocating more funds each month to pay interest means having to increase other expenses on the credit card, which will result in an increase in outstanding balances and future interest expenses.

It is predicted that the proportion of debt interest to the economy will reach a new high next year. This means that the United States will have to spend more income than ever before to repay federal debt. The actual situation may be worse than the predictions of the Congressional Budget Office. These predictions are based on overly optimistic assumptions, such as significant declines in inflation and interest rates, and no recession in the next decade. If any of these assumptions do not hold true, debt interest rates will quickly reach extremely high levels.

More seriously, the cost of repaying federal debt accounts for 40% of personal income tax. Personal income tax is one of the largest sources of government income. From American payrolls, it can be seen that for every dollar lost in federal income tax, 40 cents are used to pay interest, which is shocking. These funds should have been used to build roads, bridges, hospitals, schools, or armies, rather than to pay interest.

Although some people believe that this is a problem for future generations and there is no need to worry too much now, in reality, everyone is paying the price for government spending going out of control. Through the implicit taxation brought about by inflation, American income and savings are quietly being consumed by Washington D.C. When the Federal Reserve creates currency for government consumption, it weakens the value of the existing US dollar and transfers purchasing power to newly created currency, which is now in the hands of bureaucrats. The loss of purchasing power is actually a true tax, which has caused the public to lose about 18% of their savings and income in the past three years. If Americans want to know why they can't afford a house, they just need to look at the current record breaking housing prices and the 2.5 times increase in mortgage interest rates compared to three years ago, both of which are the consequences of excessive government spending, collectively leading to a nearly 80% increase in housing costs.

Overall, the root cause of this crisis lies in the US government's excessive reliance on borrowing and printing money to stimulate economic growth in response to shocks. This short-term economic stimulus policy overlooks long-term economic stability and sustainable development. Excessive government spending and money supply have led to a surge in the money supply, posing a risk of inflation and bringing enormous uncertainty and risk to the economy. To avoid similar crises from happening again, the US government should carefully formulate economic policies, focusing on balancing short-term stimulus and long-term stability goals.