US federal debt has hit unprecedented levels, surpassing 33 trillion dollars, equivalent to 129% of the American GDP. Interest payments on this debt reached a staggering $659 billion in the current fiscal year, more than twice the entire GDP of the Czech Republic.
Under the leadership of the Democrats and President Joe Biden, the US government's debt level, which has almost doubled in the past two years, is becoming alarming. Some Republicans and economists warn that such levels of debt are now unsustainable and might pose a threat to the stability of the global economy.
Adding to the fiscal imbalance is the heightened base interest rates of the Federal Reserve (Fed), currently at their highest in 22 years, standing between 5.25 and 5.50%.
Interest payments on federal debt are nearing defence and healthcare expenditures and might become the second-largest item in the US budget within three years, right behind social and pension system expenses.
If the US government continues to face escalating costs in servicing its debt and fails to control the situation, they might be driven to borrow even more money through bond issuance to cover interest payments. This could lead to financial instability affecting not only the USA but the global economy as well.
The possibility of the world facing a severe economic downturn, impacting people's lives globally, cannot be ruled out. It is thus crucial for the US government and Congress to take necessary measures to prevent a potential catastrophe.