We love to talk about America. The reinforced concrete Soviet argument lasted for a long time: "But they negro blacks." In today's Russia they say differently: "They have a public debt above the roof, they will soon crash down." With blacks and lynching everything has long been clear. But with US government debt is not very clear. Is everything really scary? It's time to figure it out.
Place the points over i
First of all, the US government debt is not an exaggeration or an agitational horror story, it is a real huge loan from the federal government that has not been paid so far. Terrible percentages run over it every minute.
To say that the United States is the largest debtor in world history will be a true statement. A debt of more than $ 20 trillion is fantastic money, it is even visually difficult to imagine.
Not a single country can even come close to this debt, even EU states, if you take everyone together. But there is a nuance: we are talking about the sum in absolute terms. And in serious analytics, everything is considered in comparison, so it is always preferable to operate with relative values.
To say that the United States with its debt is at the end of the world's dozens of debtor countries (9th place) will also be a true statement. This is because the most objective assessment of debt will be its allocation to GDP, which is also huge in the country and is quite comparable with US government debt: 19.3 trillion (GDP) versus $ 20 trillion (debt). This situation can be compared with a debt equal to the annual salary of a person - it would seem that it’s okay, repayment is quite real. But nothing happens in the global finance movement. The mere fact that the debt growth rate is higher than the GDP growth rate does not inspire optimism.
What to do and who is to blame
If anything should confuse the federal government, it is a rapid increase in debt. It began to grow at cosmic speed in the 1980s during the presidency of Ronald Reagan and in connection with his famous Reaganomics. Then taxes were reduced, budget expenditures were reduced, government intervention in the economy was minimized and … military spending was significantly raised - this was the height of the Cold War with the USSR. Reagan is ranked among the most successful American presidents, he achieved his goals and boosted the country's economy. But truly “you have to pay for everything” - Reaganomics cost the country a lot. The real public debt of the United States has grown over the eight years of his reign from 26% to 41%. All this was explained in two simple words: budget deficit - expenses were higher than revenues.
Since then, debt growth has not stopped. Each president "applied" his own efforts for this, especially those who waged wars were especially successful in this matter.
The Republicans, with their fighting enthusiasm, have the highest presidential anti-rating in terms of debt growth. If Ronald Reagan is a champion, then George W. Bush has honorary silver.
How it all began
What should a country seek and borrow money for? Of course, war is a common thing. In America, too, it all began not in the best of times, at the end of the 18th century. They borrowed money for the Anglo-American war, for the civil war, for the First World War. During World War II, debt reached its maximum value - 121% of GDP due to huge military spending.
Then, during the period of economic growth, public debt was reduced to 30%. At this level, he stayed until the arrival of the already mentioned Ronald Reagan. Such a swing between wars (the highest costs with a deep budget deficit) and peaceful creative stages of development (budget surplus or conscious measures to reduce public debt) are considered classics and reliable historical regularity - “loans from war to war”.
What do the Americans themselves think about it
First, Americans are well aware of the development and risks associated with US public debt. Debt growth and methods of paying it off are often the subject of political debate, especially in the context of election campaigns of various calibers: from party primaries to presidential election campaigns.
Donald Trump has always criticized Barack Obama and the Democrats for the dynamics of changes in US government debt. After taking office, he reduced further borrowing, trying to keep his debt at about $ 20 trillion. Installation "do not borrow anymore!" It looks very attractive to the broad masses of Americans. Another question is how long Trump will stay at this mark: he has already spent hundreds of billions of dollars to support this promise.
One way or another, funds for debt repayment are annually laid in the budget. They are engaged in a state debt. The forecasts are very different, no one undertakes to predict the development of events with an accuracy of 100%.
Who is the lucky one? Who should America
The structure of US government debt is simple and straightforward. America owes a third of its debt to itself - to state organizations such as social insurance funds and pension funds, the main thing is the US Federal Reserve. The second third of America owes to its citizens, both individuals and legal entities.
The external public debt of the United States is only 33% - this is exactly a third of the total. The old largest borrower has always been Japan (a share of 21%). Solid packages of treasury bonds are held by Brazil, the United Kingdom, and oil exporting countries. US government debt to Russia is almost 4% of external debt. But America owes the most to China, whose share is 24%.
How China became the largest US borrower
In the 1990s, the trend was the transfer of production to countries with cheap labor. It was especially pronounced in the landing of American companies in China. The result was a return flow in the form of finished Chinese-made American products. The deficit in US foreign trade and China's trade surplus resulted in China's purchase of US liabilities on foreign exchange surpluses. History is indicative, and it concerns not only the USA and China.
What is being done in the world: who and what debts
Almost all countries owe to someone. If we consider government debt as a percentage of GDP (the most objective assessment), then Japan is a champion by a huge margin with a debt of 251% of GDP. The silver medalist, Lebanon, is equal to 148%. Russia is located far below the list with a debt of 19%, one line above Kazakhstan with 20%, and in the neighborhood is the United Arab Emirates with 20%. There are three countries that have no debt at all - Macau, Palau and Brunei.
Does the size of the public debt or its absence speak of the success of countries? Of course not, these numbers have never been criteria for economic efficiency.
Ninth shaft or full calm
You can track the amount of US government debt in real time online in the network, flickering numbers make a strong impression. Forecasts and prospects for the development of the state debt situation are very different: from the promise of a complete collapse in the country to the certainty that there is no danger at all.
To at least stop its growth, there are only two ways: either reduce social spending, or increase taxes. The first option is fraught with serious difficulties: the fact is that people of the baby boom generation have begun to retire. There are a lot of them. They were born during the boom period, and they will retire for about twenty years. Baby boomers are already weighing heavily on the shoulders of social systems around the world. The United States with its public debt will not stand aside. So there will be no easy decisions, all experts agree with this.
