America, which is said to be the world's largest and most powerful economy, is facing a financial crisis which has shocked the entire global economy. According to the recent data from the US Finance Ministry, the total national debt of the country has crossed the historic and shocking figure of 40 trillion dollars for the first time in history. This uncontrolled financial situation has not only worried American policy makers and lawmakers, but has also sparked a debate among economists around the world whether the global superpower is heading towards a major economic crisis in the future. This debt incurred by America is increasing so fast that everyone is surprised to see its figures. How and why did America's national debt get out of control? Experts believe that in the last few years, America's budget deficit has continuously increased to record levels, due to which the government has had to borrow on a large scale to meet its expenses. The US government's expenses have far exceeded its total tax income. Due to increasing expenditure on defense budget, social security schemes, health services and many big economic packages and relief packages given in the last decades, the burden of liabilities on the government kept increasing rapidly. Apart from this, due to prolonged fluctuations in interest rates by the Federal Reserve, the government is also having to pay huge interest on its old debts, due to which this debt mountain is becoming more formidable. What is the debt burden on every citizen and family of the country? When this huge figure of $40 trillion is divided among the total population of America, the situation looks even more scary. According to current demographic data, every American citizen has an average government debt of more than one lakh dollars. If we talk about an ordinary American family, their share of debt amounts to several lakhs of dollars. This invisible economic burden is hanging on every person in the country, from newborns to the elderly. Economists say that this situation is not sustainable in the long term and if it is not controlled in time, the tax burden on American taxpayers may increase further in the future, which will have a deep impact on their purchasing power. What will be its impact on the global economy and dollar? The impact of this increasing debt of America is not going to be limited only to the American borders, but it can have a direct impact on the economy of the entire world. With the US dollar being the world's main reserve currency, any fluctuations in America's financial health tend to shake global markets. Due to this huge debt, the risk of inflation and recession (Stagflation) in the American economy has increased significantly. Apart from this, global investors are now also beginning to question the credibility of US Treasury securities, due to which the demand for safe assets like gold is increasing rapidly in the international markets. If the US government does not take strict measures to control the fiscal deficit, instability in the global financial system could deepen. What is the way forward and solution to this crisis? To deal with this critical situation, the US Congress and the Biden administration will face a big challenge in taking tough and unpopular financial decisions in the coming days. The government has only two main options left, either to make a historic cut in its huge expenses or to increase the tax rates in the country, although politically both these paths are considered very difficult. Both the Republican and Democrat parties are debating on how to bring back fiscal discipline in the country, but due to lack of political consensus, the debt graph is continuously moving upwards. In the coming time, the eyes of the world will be on American policies and its economic moves, because this crisis is sure to have an impact on the trade and markets of every country.
