America's Debt Now $37 Trillion MHM NEWS

MHM NEWS

7/6/2025

America's Debt Now $37 Trillion

Transcript

00:00America's Debt, Now $37 Trillion

00:08The United States' escalating national debt has created renewed global concern.

00:14After President Donald Trump's announced big, beautiful budget bill received congressional

00:19approval, questions have arisen about the scale and sustainability of this debt.

00:23Critics fear that Trump's tax-cutting budget bill will add at least another $3 trillion

00:27to the United States' $33 trillion debt.

00:31Dear viewers, if you like this news, please like it and share your comments in the comment box.

00:36There is no shortage of critics regarding this growing U.S. debt.

00:40Even Trump's former ally, Elon Musk, has called the budget bill abominable.

00:46Faced with this enormous debt burden, many are questioning how long the world will be

00:50ready to lend to Uncle Sam. These concerns are becoming increasingly clear. Recently,

00:56the weakness of the dollar and investors have started demanding higher interest rates for

01:01lending to America. This is where the U.S. has to borrow money to reduce the difference between

01:06annual income and expenditure. Since the beginning of this year,

01:10the dollar's value has fallen by 10% against the pound and 15% against the euro.

01:15Although the cost of U.S. debt has remained stable overall, the difference between long-term

01:20and short-term interest rates, known as the yield curve, has widened or moved upwards.

01:26This indicates growing fears about how sustainable U.S. debt will be in the long term.

01:33Yet, the U.S. has cut interest rates more slowly than the European Union and the U.K.,

01:38which should have strengthened the dollar. This is because higher interest rates can lead to

01:42investors getting more interest on bank deposits.

01:45Ray Dalio, founder of the world's largest hedge fund, believes that U.S. debt is at a turning

01:52point. He estimates that at the current pace, the U.S. will soon have to spend $10 trillion a year on

01:58borrowing and interest payments. Dalio said,

02:01I am sure that the financial situation of the U.S. government is at a turning point. If it is not

02:07dealt with now, the debt will reach a level where a major disaster cannot be avoided.

02:12Meanwhile, although Trump's new budget bill reduces some spending, the amount of tax cuts

02:18is even greater, thus the current political trajectory is moving in the opposite direction.

02:23Additionally, due to the increasing debt, the U.S. has lost its latest perfect credit rating.

02:29Analysts warn that if the current situation is not managed,

02:32three potential crises could emerge in the future. According to them, the first option for the United

02:38States is to cut government spending, significantly raise taxes, or both. Ray Dalio has suggested that

02:44quickly bringing the budget deficit down from the current 6% to 3% could help avoid major trouble in

02:51the future. Secondly, like past crises, the U.S. central bank, Federal Reserve, could print more

02:57dollars to take on government debt. This was also done after the 2008 financial crisis. However,

03:03this strategy can increase inflation and inequality because it benefits asset owners like homeowners

03:09and stock owners much more than those who rely on labor income. The third and most dire option is

03:15for the United States to directly fail to repay its debt or default. That is, it cannot repay the debt,

03:22so it doesn't. In this situation, if confidence and trust in the U.S. Treasury support the global

03:27financial system, then a terrible financial crisis would seem like a minor picnic. Analysts say that,

03:34fortunately, none of these are very likely to happen for now. But the reasons for this are not

03:38very comforting. The reality is, whether we like it or not, there are still not many alternatives to

03:44the dollar in the world. Economist and former bond expert Mohamed El-Erian told the BBC that many

03:51are trying to reduce their dollar holdings. He said,

03:54The dollar is too heavy and the world knows it, which is why we have seen the rise of gold,

03:59the euro, and the pound. But it is difficult to change currencies on a large scale,

04:04so there is not much room to go anywhere else. He compared the dollar to the cleanest dirty shirt

04:09that one has to wear. Nevertheless, the future of the dollar and the world's benchmark asset,

04:15U.S. government bonds, are being discussed at the highest level. The governor of the Bank of

04:20England recently told the BBC that U.S. Treasury Secretary Besant is extremely confident about the

04:26level of U.S. debt in the dollar's position. He does not believe the dollar is fundamentally

04:30threatened at present, but he is extremely aware of these issues and is not underestimating it.

04:36But anyway, $37 trillion in debt is an unimaginable number. If a wealthy person saves $1 million,

04:4310 lakh, per day, it would still take him 100,000 years to save that much money. Economists say it's

04:50wise to view debt as a percentage of a country's income. The U.S. economy earns about $25 trillion a

04:57year. Although its income-to-debt ratio is higher than many, it's not like Japan or Italy. Behind this

05:04is the world's most innovative and wealth-creating economy. In 1968, William F. Rickenbacker published a

05:11book called Death of the Dollar. In the book, he warned about the risks to the dollar's status as

05:17the world's reserve currency. Rickenbacker is no longer alive, but the dollar still is. However,

05:23this does not mean that the dollar's status and value are a divine right that cannot be deviated from.

05:29it is.

America's Debt Now $37 Trillion MHM NEWS

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