How is America trapped in a big crisis and a world on the brink of destruction? | USA Economy Crisis.

 

How is America trapped in a big crisis and a world on the brink of destruction? 

After the banking crisis, America, which is considered to be the most developed country in the world, is going through difficult times. Now the news is coming that the Western country is going to be hit by the world's biggest recession. Lakhs of jobs will be lost and the country will be completely in debt. If it is not resolved in time, then there will be a crisis in the economy of the whole world.

It is being said that the sound of the biggest recession is being heard in America. The reason behind this is being told that the solution to the debt ceiling is not found. This means that if the American government does not increase the debt limit, then along with America, the world's biggest economy will be in the grip of recession. 

A date is being told about America and the recession, that is June 5. If the US government does not take the necessary decisions by June 5, then America will not be saved from recession. It is being said that 83 lakh jobs will be lost only in America and this figure will reach crores in the whole world. American GDP will sink by more than 6%. 

So has the countdown to the sinking of the US economy already begun? First of all, let's talk about the debt limit. What is it after all? Credit limit means the limit of borrowing. There is a limit to taking a loan in America. This is called the debt ceiling and a bill has to be passed by the Parliament to grant new debt. 

But the problem is that Biden is a Democrat and Republicans are in the majority where the bill will pass. Overall, the Joe Biden government will have to find some solution, otherwise, there will be no money left for new payments. And if this happens then technically America will be considered default. 

The debt cap refers to the limit on the amount that the US government can borrow to spend on services such as Social Security, Medicare, and the military. The US Treasury issues securities such as government bonds to borrow money, which are eventually returned with interest. 

Once the US government reaches its debt limit, the Treasury cannot issue more securities, which blocks the flow of money into the government. Apart from this, once again in April 2023, there has been a jump in the inflation rate in America.

According to the data released on Friday, again there was an increase in the expenditure of the people in America, so it is obvious that the prices of things also increased. More than expected in April. There has been a jump of 0.4% and it has increased to 4.4%, which used to be 4.2% in the previous month.

This is the first time since January 2023 that there has been an increase in inflation. It is believed that the inflation rate has increased due to the increase in the prices of services, food, and goods. Leaving aside the inflation of food, the inflation has reached 4.7% in the last month. In May, the Fed raised the policy rate to combat inflation.

The Fed Reserve hiked by 25 basis points and with this hike raised the interest rate to 5.25%. With this increase, the interest rate in the US has reached its highest level in 16 years. Every year the government collects revenue from all its things including tax, but if more is spent than earned, then the government comes into a deficit. 

And this deficit goes on increasing year after year, and a time comes when the country starts drowning in huge debt. Similarly, the debt in this developed country is continuously increasing. The total debt in America has increased to more than $ 31.46 trillion. According to this, every American citizen currently has a total debt of about $ 94,000. 

America is spending $1.3 billion amount every day in paying interest on the debt. US Treasury Secretary Janet Yellen warned that if the government does not increase the debt ceiling, then on June 1, there will be a cash crisis. US President Joe Biden had also talked to Republican leader Kevin McCarthy to increase the debt ceiling, but this conversation remained inconclusive. 

Joe Biden's government has only a few days left to increase the debt ceiling.  How to avoid this is an important question. Biden's party Democrats have less number of MPs in the US Upper House Senate. That's why Joe Biden is trying to persuade opposition MPs. But the opposition Republican Party is adamant on spending cuts. 

Former President and Republican leader Donald Trump has told his lawmakers not to support raising the debt limit until the government agrees to cut spending, and it is clear that the opposition is trying to surround the government on such an issue.

It has to be seen what decision the Biden government takes on this in the coming days. If America comes in its grip, then no one can save the whole world from recession. That's why now everyone's eyes are fixed on America. Tell us how you liked the information by commenting.