/Pogled.info/ Moscow is driving the United States into bankruptcy, which is critical to the global dollar financial system. That is why the transfer of the SVO to Ukraine will not be urgent.
The US national debt has reached catastrophic levels
On October 5, the US national debt exceeded $ 31 trillion for the first time. According to the British financial media Finbold, by 2022 it is increasing by almost $ 6 billion a day.
The amount of debt exceeds the size (in terms of value) of the economies of China, Japan, Germany and the UK combined, says the Peter J. Peterson Foundation (PGPF). If every US family paid $ 1,000 a month, it would take 19 years to pay off the debt.
The US debt-to-GDP ratio reached 135%. This relationship is considered disastrous for any country, but not for the United States, as long as they can honor their debts.
And here comes the big problems.
Debt service becomes overwhelming
The first set of “bombshell” is the rising cost of debt service. This problem arose due to the attempts of the US Federal Reserve (FRS) to fight inflation, which the same regulator created by printing money (the so-called quantitative easing policy) in the years of the covid-19 epidemic.
The prime rate is growing at an unprecedented rate and is already 3.5% with an expected growth of 8% which is crazy for the dollar zone. Because it makes it more expensive to service not only the American debt, but also a huge number of countries, since the world’s public debts are mostly denominated in dollars.
“Interest rates on public debt are skyrocketing and approaching what economists call a “cycle of death,” a vicious circle in which borrowing from the government to pay interest generates more interest and more loans. “ the Wall Street Journal concluded in late September.
“There will be a greater risk of investors losing confidence in the US government’s ability to service and repay its debt, leading to a sharp rise in interest rates and a sharp rise in inflation or other disturbances. “ the Congressional Budget Office said in May.
That is, the very fight against inflation in the United States only increases it.
Nobody wants to buy US debt
The second “bomb” is the problems with debt refinancing. US government debt in bonds (treasury) has ceased to be repaid, that is, it has become difficult to refinance, which previously allowed any ceiling to be reached. So far their purchase has been mainly made by the Eurozone, which had a trade surplus, but now Europe is at a loss due to anti-Russian sanctions. The other large buyers, Japan, China and the Gulf States, have recently lost US Treasuries.
Japan is implementing a dumping policy to save yen and pension funds. China fears an asset freeze following Russia’s lead. After Joe Biden’s threats to crack down on Saudi Arabia and even impose sanctions on OPEC, the Gulf states realized that holding treasuries was not a safe option.
The situation is so close to the abyss that US Treasury Secretary Janet Yellen has asked the big banks to buy back some of the government bonds. But interest rates on government bonds are lower than inflation, so it’s not very profitable for banks to buy them.
United States close to default
Washington is very close to the situation London faced last week. The Bank of England intervened with emergency purchases of government bonds, triggering the printing of money to stop the rise in yields. This threatened the collapse of pension funds.
In the US, the 10-year Treasury yield recently surpassed the key yield of 4%. You can of course include the printing press as well, but this is a temporary measure, once again leading to increased inflation.
The volatility of the bond market will encourage investors to dump them. The banks will not buy them, it will lead the United States to debt default.
A US default would affect the global economy by limiting global trade, disrupting supply chains, impacting trade contracts, undermining the dollar’s status as a world reserve currency, and so on.
Last year, when the U.S. government threatened to default on its debt, Moody’s Analytics estimated that stock prices would likely drop 33%, triggering a recession that could rival the Great Depression.
Russia will not rush to Ukraine
Meanwhile, Yellen herself seeks the introduction of a ceiling on Russian oil prices, which will lead to an increase in the price of the fuel cycle and again an increase in inflation. That is, one of Yellen’s hands doesn’t know what she is doing in the other. Many in the US (Republicans) say that to fight inflation it is necessary to cut spending, especially military spending.
And this is the moment of truth. The understanding will come that the longer Europe is unprofitable, the harder it will be for states to finance their unprofitable state budgets and refinance their debts. As soon as Ukraine loses US financial and political support following the Trump victory in the November congressional elections, the Kiev regime will be brought to an end.
Therefore, Russia will not be in a hurry to rush to war. The goals are great. As the German Chancellor Olaf Scholz rightly stated – “the great crusade “ Vladimir Putin’s revenge against the West is underway.
Translation: ES
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