It is a fact now that the United States has a massive debt. This matter comes out more clearly during national campaigns as politicians give lengthy speeches on how they will address the debt issue. They talk of cutting down its size and, at the same time, reducing the chances of it rising in the future. However, this does not seem to be happening once the politicians gain power. It has reached a point where players in the financial sector have to live with the fact that the country has a large debt size and therefore should prepare for the effects of a large debt. But, what are some of the effects of high debt? U.S. Money Reserve is an organization that has taken up the role of ensuring that people understand what can happen if debt matters are not looked at keenly.
Currently, the U.S. debt stands at $21 trillion, making it the biggest for any country in the world. The debt is even higher than the GDP of the whole country. This amount carries with it a huge burden on the citizens of the United States. Just like any other debt, the amount should be paid with a certain interest, meaning that the country will end up paying more than the current burden. And, of course, if they keep delaying the payment, it will continue to pile up. The amount of interest that the Federal Reserve paid in 2018 exceeds the money that is paid for any of the government’s programs. For instance, the amount of interest paid exceeds the military budget.
Implications of Excessive Debt
Owing a debt is not something unheard of. Just like in the business sector, a loan can be of huge benefit in boosting the development of a business. However, when the debt becomes too large, it gets to a point where it affects the borrower negatively. Now, the U.S. economy is at that juncture. This debt is now affecting the economic and financial well being of the country as a whole. According to a video released by U.S Money Reserve, there is a high probability that this debt will get in the way of economic growth in the United States.
When the ratio of debt to GDP shows that the debt is more than the GDP, we have a serious challenge that needs to be addressed by players in the financial sector. According to experts at U.S. Money Reserve, this is an indication that the government will struggle to repay the debt. This kind of uncertainty may lead to devaluation of assets and commodities.
With the government borrowing from some internal programs such as the social security, it is coming to a point where it looks like it might not be able to repay all the money needed to finance the operations of social security. In such a scenario, we might be facing a social security crisis that will spell doom for the nation’s financial security.
About U.S. Money Reserve
U.S. Money Reserve is a leading supplier of government coins and other precious metals. It enjoys a reputation for high-quality services. It is also recognized for educating its customers and the public in general about wealth protection and other financial matters. This company has excelled so much because of the leadership that it enjoys from Philip N. Diehl, a former director of the U.S. Mint.