Posted: 26.01.2023 15:58:00

Words pay no debts

The US has reached the limit on public debt of $31.4 trillion: where is the ceiling and will there be a default?

The problem of increasing the US debt limit has become a hot topic of debate within the political establishment for the past ten years and attracts the attention of the whole world. Why does the US constantly live in debt, is not afraid to expand this campaign, and where is the end of this game of cheaters? Let’s figure it out together.

No more increase 

On January 19th, the US reached the $31.4 trillion limit on public debt. On January 13th, Secretary of the Treasury Janet Yellen warned Speaker of the House of Representatives Kevin McCarthy in a letter about the risk of exceeding. 
To avoid default, the Department of the Treasury is ready to take ‘extraordinary measures’, in particular, to refuse contributions to the pension and social fund, which will allow pushing the topic of expanding the limit until mid-2023.
In November 2021, Janet Yellen advocated raising the national debt limit by $2.5 trillion, and the very next month, US President Joe Biden signed a decree raising the limit to the current level of $31.4 trillion. Then the Republicans opposed the increase in the national debt: they called on the President and the Democrats to cut spending and start a policy of reducing the public debt. However, Biden said that the failure to resolve the issue of expanding the limit and the conflict in the US Congress with the Republicans could lead to ‘undermining the reliability of US Treasury securities, and would also threaten the status of the dollar as the world’s reserve currency’. 
As an argument, Biden noted that during the presidency of Republican Donald Trump, Congress agreed to raise the national debt ceiling four times, the Democrats then supported these decisions. He urged Republicans to ‘stop playing Russian roulette with the US economy’.
In 2023, experts also expect ‘bargaining’ between Democrats and Republicans. In exchange for agreeing to raise the limit, the Republicans are demanding cuts in the state budget, primarily military spending by $75 billion (about 10 percent of the Pentagon’s budget). 
According to the US Treasury, if urgent steps are not taken now, the government’s default will cause irreparable damage to the state and not only ‘the US economy, the well-being of all Americans, but also international financial stability’ will suffer.

Struggle for power

According to the Rasmussen Report, 76 percent of voters are concerned about the problem of external debt. More than 50 percent are dissatisfied with the December law on additional budget spending of $1.7 trillion in the current financial year (this document also included $45 billion in aid to Ukraine). According to CNN, after the establishment of Republican control over the House of Representatives in the US Congress, a real ‘battle’ between the parties is expected on the issue of raising the public debt limit.
It is important to understand that the United States lives not so much on official external borrowing through the issuance of securities of the US Treasury, but on the widespread replication and distribution of the dollar as the world’s equivalent of value and reserve currency.
Thus, the volume of this currency and various credit derivatives (non-cash money) around the world is $644.42 trillion, which is 2778 percent more than the US GDP.
It is clear that the excessive issue of money leads to the depreciation of the dollar in relation to the natural equivalents of value, which are precious metals. So, now the ratio of the dollar to a troy ounce of gold is $873, while in 1913 this figure was $28.68 per ounce — that is, 30 times more. Of course, the country’s life on the basis of unsecured finance affects the real production sector of the economy. People cannot self-actualise and their place of work. 
Thus, with a US population of 334.28 million people, the real unemployment rate is 10.53 million (official statistics give a figure of 5.69 million people). In fact, this exceeds the number of all citizens of Belarus.

Empty dollar policy

Maintaining the status of the world currency by the Federal Reserve System requires the US political leadership to take increasingly tough, aggressive actions against its main opponents —Russia and China. The confrontation between NATO and Russia on the territory of Ukraine is one of such points of struggle for the dollar. 
The increase in the level of escalation and unpreparedness for peace talks on Ukraine and on the security zone for Russia is connected precisely with the fear of the Fed and the US Treasury of an outflow of global investors from US securities and the abandonment of the dollar. All printed dollars and non-cash accounts denominated in dollars can simply turn into candy wrappers overnight.   
Moscow’s resistance and Washington’s failure to achieve its desired goals in Ukraine (the collapse of the Russian economy, the Russian ruble, protests) lead to the need to open a ‘second front’ — against China, but not with their own hands, but on the model of a proxy war with the hands of the Japanese. Thus, the Chinese edition of the Global Times noted that Tokyo is striving for militarisation under the influence of Washington, and this can turn Japan into an ‘Asian Ukraine’. 
At the same time, the selfish financial and economic policy of the United States causes disagreement not only among Russia and China. Now the main production centres of Europe (France, Germany, Italy) have begun to oppose Washington more and more clearly. As for the States themselves, it is becoming more and more difficult to live in debt and distribute painted money. Maintaining the Fed’s confidence in the dollar system requires radical, aggressive action and militant rhetoric from Washington. However, there are more and more players who play against the USA, and the probability of Washington’s financial and economic loss increases every year. 

The President of Belarus, Aleksandr Lukashenko,
“They are trying to redivide the world. Those who have power or believe that they have power are trying to chip away at their neighbours, someone else, in order to gain the upper hand and strengthen their positions the way they understand it. Look, this is happening all over the world. And, of course, the United States is leading the way. They probably don't even need to bite off anything… Then the pandemic came to lay bare all these ulcers. Remember, the European Union opted for ‘helicopter money', the Americans embarked on printing money. I said that it would eventually come back to bite them. Now we have rampant inflation in the world and this is a real challenge for the economy.”
During his working trip to Myadel District on August 2nd, 2022

The length of the Earth’s equator is 40,075 kilometres.
The thickness of the $100 bill is 0.1075 mm.
The US national debt has already reached $31.4 trillion.
In 100 dollar bills, this is 33,755 kilometres.
Just a little bit left — and the debt of a country that considers itself 
the world hegemon will cover the entire Earth.

By Aleksei Avdonin, an analyst with the Belarusian Institute of Strategic Research