At someone else's expense

The United States is on the brink of default.

This opinion was expressed by Nikolai Patrushev, Secretary of the Russian Security Council, speaking online to his colleagues from the Association of Southeast Asian Nations (ASEAN).

And he based his point of view on the rapidly growing national debt of the United States, which at the beginning of this year exceeded $ 30 trillion, which is already more than the country's annual GDP.

Some experts, of course, will say that the Russian official is wishful thinking.

That we have been burying the American economy since the days of the Cold War, and it is the most alive of all living things.

Well, debt - what is debt?

It is there, it is large, but it is serviced without any problems.

In fact, the debt situation is an example of the deep weakness of the American economic system.

In fact, the system is parasitic: the American economy lives at the expense of other countries.

Federal budget expenditures regularly exceed revenues, and this difference is resolved through external borrowing.

The United States has a legal ceiling on external debt, and every time the volume of borrowing approaches this level, the President (after approval from Congress) raises it.

As Alexander Venediktov, Deputy Secretary of the Security Council of Russia, absolutely rightly said a few months ago, “if someone takes more and more loans, trying to solve the problem of existing ones, then this is either an inadequate person or a fraudster who initially had no intention of repaying debts.”

At first, America was rather inadequate - for it, loans were the cheapest way to solve the problem of the discrepancy between the revenue and expenditure parts of the budget.

The most active practice of “raising” began to resort somewhere from the end of the 2000s - after Barack Obama came to power, who, at the height of the financial crisis, wanted to implement grandiose social programs.

Under him, the national debt grew by $10 trillion, and by 2017 its total volume exceeded $20 trillion.

Under Trump, almost another $7 trillion has been added to it.

Biden, in the first year of his reign alone, added several trillion to this “piggy bank” - and this is the United States that has not even really entered the global recession, which is expected in the fall.

A recession that some economists are calling the worst of all time.

recession

And if the recession is really like this, then the increase in debt, coupled with economic problems, could lead to the fact that the United States may have a debt service problem.

This means that Washington will have to answer the question: “What to do?”

You can, of course, act according to the law and conscience, that is, shrink.

For example, to raise taxes for ordinary citizens or to reduce the expenditure side of the budget (in particular, social programs, etc.).

However, in practice, such measures are extremely difficult to implement.

Increasing already high taxes will hit the well-being of ordinary Americans, many of whom live paycheck to paycheck, forced to pay off a bunch of loans.

Polls show that 23% of US residents do not have any savings for a rainy day, and 50% have enough financial fat for a maximum of six months.

Meanwhile, already now 43% of Americans are planning to take loans in the next six months in order to make ends meet.

If these costs are also polished by tax increases, then the current situation will lead to a reduction in domestic demand, which means it will exacerbate the recession in the economy.

Reducing the expenditure items of the budget is even more difficult to implement.

Firstly, because of the extremely negative reaction of national minorities (who for the most part vote for Democrats) or white hard workers (in recent years, more and more sympathetic to the Republicans).

The electoral specificity of the United States is such that in a number of states the balance between Republicans and Democrats is extremely shaky, and if part of the electorate of the party that decided to cut social budget items does not come to the polls, then the party will lose this state.

Both in the elections of governors, senators and congressmen, and in the course of the future presidential campaign.

Therefore, none of the parties - especially the Democrats with their "socialist" approach - will not subscribe to the reduction of budget items.

Secondly, because of the extremely negative reaction of the senators and congressmen themselves.

Formally, the States are still a federation, and a federation, so to speak, with a small-town character.

For local voters, the interests of their own state are more important than any opinion in Washington, so they demand from their elected senators, congressmen and governors to protect the interests of the state.

And local politicians respond to these demands (unless, of course, they want to be re-elected).

They also respond by milking the federal budget in the interests of their own states.

Finally, thirdly, because of the negative reaction of various lobbyists promoting the interests of manufacturing companies and / or public organizations.

The budget of the United States is, in fact, a colossal compromise, formed with the help of those very lobbyists.

Therefore, it is possible that the United States will use a much simpler and obviously illegal way of solving problems, namely the one that Nikolai Patrushev is talking about.

“Washington will default, as they have already done with respect to obligations to Russia.

The financial assets of any state denominated in US dollars and euros will simply be stolen,” he explains.

Moreover, the Americans will not even call what is happening a default - it will be a democratic withdrawal of funds accumulated illegally.

And the only way to prevent the theft of funds is the one that Patrushev told his ASEAN colleagues about, that is, the de-dollarization of national economies.

The point of view of the author may not coincide with the position of the editors.