External debt of the USA

The USA is a country with a well-developed economy. For many people around the world to get to America - a cherished dream. After all, the standard of living in the country is quite high, and the business sector is well developed. However, anyone who has even a little interest in the events in the world economy, most likely heard that the United States has a huge debt. And we are talking not only about external obligations, but also about internal debt. The external debt of the US today exceeded 15 trillion. Dollars. This is a record amount, and it continues to increase. Today, the country's external debt is 100% higher than its GDP.

However, one should understand whether such a debt is so terrible. After all, the record is only in absolute terms. But in relation to GDP, it is not that big. There are countries with less debt, which, nevertheless, several times higher than the GDP of these states. The external debt of America can be repaid, because most of its part is provided with sufficiently reliable securities. Formally, the US is one of the most creditworthy states. Therefore, the various arguments that a country can split and that its economy will soon fall victim to a new crisis is no more than rumors. There are several reasons why US foreign debt has been growing for more than two decades.

First of all, it should be noted that the import of goods in the country has significantly exceeded exports since 1985, which creates a negative balance. America consumes, for the most part, goods produced in other countries. We also need to remember the debts of the private sector, interest for the funds previously received by the state and a large deficit in the country's budget. The entire external debt of the United States is denominated in dollars. Therefore, by issuing its own currency, America can theoretically at any time extinguish it.

However, a number of creditors do not really rush the country to give money. Among the US creditors are companies and countries. Interestingly, most of the funds were received by the United States from two states: Japan and China. The money was transferred to the US in local currency at a very low interest. Practically, the interest rate on this debt is zero. However, not everything is so simple, because no reasonable government lends money for nothing. China and Japan are no exception. By giving money in yuan and yen, they expect to get them back in the US currency conversion, that is, in dollars. And as the currency of America tends to grow in price and develop, the creditor countries expect to get a good profit from their investment. As for Russia, the US external debt to it is not so great. It is only 3.8%. Among all creditors of America, Russia is in the eighth place.

The debt of the USA to other countries (central banks of countries) is equal to 25% of the total debt of the country. Most states received funds from various companies and organizations. Large firms are not against investing in bonds of America, as they are reliably secured and bring a decent income at an interest rate. Here and there you can hear statements that the US is using other countries as slaves. Such conclusions are made on the grounds that the United States is the main consumer of goods of many countries. And they consume the states on credit. If America suddenly refuses to import, some large companies will be ruined, because there will simply be nowhere to sell the goods.

The US supports the process of production and consumption, thereby launching economic development in some states. On the other hand, these countries can not refuse to supply the United States for understandable reasons either. The result is a vicious circle. America without external supplies may fall into crisis. And in this case, it will not pay off even with the debts that it already has. Thus, it is concluded that the US attracts real goods, and in return gives only promises and papers.