ACTV - The World's Debt Problem Will End In Tears

2024-06-25 14:45:00 ET

Summary

• According to the Congressional Budget Office’s most recent report, at a time of cyclical strength and very low unemployment, the US is running a budget deficit of seven percent of GDP while its public debt-to-GDP ratio is on track to reach an all-time high of 122 percent by 2034.
• The key difference between the United States government and those of other countries is that it borrows in its country’s own currency.
• Before the US experiences its dollar crisis, Japan’s dismal public finances are likely to cause a Japanese yen crisis.

Herb Stein famously said that if something cannot go on forever, it will stop. He might very well have been talking about the unsustainable debt situations of the United States, Japan, and France. All three of these cases of excessive debt build-ups are more than likely to end in tears. However, the ending of each of these cases is likely to occur in different ways....

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