Trump's Debt Disaster: US Economy on Brink of Recession
Concerns about the US economic outlook are growing, with some experts likening it to the Global Financial Crisis. The Trump administration's loose grip on reality and its creation of a massive budget deficit have sparked alarm. The US government is on track for a $US2 trillion budget deficit this year, with gross debt exceeding $US40 trillion last month.
The interest bill on that debt has skyrocketed to over $US1.25 trillion annually, or more than $US3 billion per day. This increase in interest rates reflects several factors, including the massive infrastructure build by big tech companies and the need for higher interest rates to cover inflation. However, there are concerns about the Federal Reserve's willingness to lift borrowing costs under new Chairman Kevin Warsh.
Trump has warned that if the Fed doesn't cut interest rates, he will 'STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.' This threat has had a feedback loop effect on the pricing of American government debt. Investors are losing trust in the US Treasury market, with Norway's sovereign wealth fund planning to cut its holdings by 40% and the Netherlands' central bank moving tonnes of gold out of the US.