Question

Can the U.S. Federal Government go broke as a result of its huge national debt?

Answer 1

The US debt amounts to more than $24 trillion. It is by far the world's highest. Every year since 2007, it has risen by $1 trillion. The debt rose, following threats from Congress not to lift the debt ceiling. The US debt crisis almost forced America to default on its debt in 2011. The fiscal cliff crisis almost stalled the government in its tracks in 2012. The Government shut down for fifteen days in 2013.

The U.S. government has spent at least $5.1 trillion in curbing the bank crisis. This is more than a third of the annual production. This also raised the debt to the U.S. Though this was not as extreme as the situation in Iceland, it had similar effects on the U.S. economy. U.S. financial markets have become less optimistic. The nation is experiencing a much slower-growing economy as a result. It's likely but it's not probable. The U.S. economy is getting bigger and more robust. The creditors buy U.S. debt when there is an economic downturn. They think this is the best investment. The exact opposite had happened in Iceland.

When the borrowers begin to worry, higher and higher yields are required to mitigate their risk. The higher the yields, the more the refinancing of their sovereign debt costs the government. In time, it can't really afford to continue to turn over debt, so it defaults. The fears of investors are becoming a prophecy which fulfills itself. That hasn't happened to the USA. U.S. demand Treasuries remained firm. That's because U.S. debt is guaranteed 100 per cent by the strength of one of the largest economies in the world. Confiance of investors in U.S. One of the reasons why the dollar is so high right now is Treasurys.