The national debt of the United States has surpassed a historic $38 trillion, or roughly $111,000 per person. This landmark moment reveals significant longstanding spending, revenue, and political challenges in Washington.
Meanwhile, the negative effect of increasing debt on America’s geopolitical ability to influence decisions is growing. As interest payments comprise more federal spending, one should watch out for reductions in defence budgets or foreign aid, both of which further reduce American influence. This gives rival powers, like China, an opportunity to enhance the yuan’s place in global trade, all in the interest of competing with the dollar more subtly than they currently can. From an economic perspective, the U.S. faces the threat of sluggish growth, inflation pressures, and possible downgrades to its credit rating, like those from Moody’s not long ago. When it comes to the debt trajectory, if things keep going like this, markets might lose confidence leading to a hastening move to financial systems that are multipolar.
Fiscal instability in Washington may shift global power balances allowing emerging markets agency at the same time forcing the United States to reassess its commitments worldwide. In other words, America’s debt clock isn’t merely ticking the sound of it carries with it global geopolitics ramifications.
