-Frits Bosch- The US looks economically strong, but appearances are deceptive.

Frits Bosch

Frits Bosch

-Frits Bosch- The US looks economically strong, but appearances are deceptive.

Is the United States doing well? That depends on how you look at it. Economic growth is at 2.4% which is significantly higher than Europe's zero growth. But appearances are deceiving. The growth comes at the expense of the country's financial stability.

The growth of the US has been accompanied by an explosion of the national debt.President Joe Biden has improved infrastructure and released many billions to address Climate change. The budget deficit comes to 6.3% this year bringing the national debt above 100%. Current US economic growth is below US interest rates. That means that the current gigantic debt level of the US cannot be reduced by growth, but increases by interest on the debt. The US has gotten away with this so far because of the dollar as a global reserve currency. But the US has been qualitatively downgraded by credit rating agencies so that US debt is no longer naturally covered by surplus countries. The risk of a sharp depreciation of the dollar is increasing. Will that jeopardize the global financial system? There are three ways to reduce the national debt. The first is to balance the primary budget through spending cuts, but Biden will not cut spending in his re-election year. The second option is to raise taxes, especially from high-income earners. Congress is blocking such an unpopular measure. The last possibility is inflation. Hyperinflation to contain the mountain of debt?unhealthy.

It is high time for the U.S. to cut spending (see the huge IRA package) ende tax increases to once again balance the budget. That does not sit with Trump at the helm. Trump favors tax cuts to gain popularity. He will not phase out Obamacare and MedicAid. Trump at the helm may endanger the global financial system by cutting taxes. The national debt bill will have to be paid sometime.There is no sight of financial policy moving in that direction and that is worrying.

US economic growth looks healthy but the fundamentals underneath are not. So far, so good. This could start posing a serious problem for the world order.

Frits Bosch is an economist and sociologist. He is also the author of "Risk as Obsession," "That's the Risk," "World at a Turning Point," "Discontent among the Elite," "Does the Netherlands Also Abolish Itself?" and "Feminism in the Workplace." His most recent book is Kafkaistan.

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