JPMorgan has warned that the growing US public debt, which
shows no signs of slowing, could pose a real problem for the US economy.
Every year, the US government increases its indebtedness, and
analysts are quick to point out that the bill will eventually come due. How
different is it this time?
It is not just that bonds have surpassed a record $34
trillion, but also high-interest rates, which are driving up debt servicing
costs.
According to a recent study, annualized gross interest
payments on US debt reached $1 trillion at the end of October, doubling from 19
months earlier.
But worse, if no action is taken, net interest costs could
rise from 2.4% of GDP in 2023 to 3.7% and 6.7% in 2033 and 2053, respectively.
It should also be noted that increased debt issuance by the
US Treasury to meet rising deficits threatens to crowd out private investment.
To be more precise, with the same trajectory of private
sector money flowing into US…
