Documents
Pictures
Videos
Forum
 
 

Fed Chair Janet Yellen Warns Congress: US Debt Trajectory Is Unsustainable



        Fed Chair Janet Yellen Warns Congress: US Debt Trajectory Is Unsustainable

< strong>Zero Hedge
July 12, 2017

During her tesimony this morning, Fed Chair Janet Yellen urged Congress to take into account the growth trajectory of the federal debt when making decisions about spending and taxation.

She said lawmakers need to work toward achieving “sustainability of this debt path over time,” …

“Let me state in the strongest possible terms that I agree” the U.S. federal debt trend is unsustainable, may hurt productivity, and living standards of Americans.

Of course she is correct, but we do not remember her being so forthright during the last few years of President Obama’s reign as he doubled the national debt?

As a reminder, the Congressional Budget Office estimated last month the national debt could reach 91% of gross domestic product by 2027. Lawmakers are weighing major fiscal policy changes, including tax cuts, changes to health care and infrastructure spending, that could drive deficits higher in the coming years. Furthermore, at the cuirrent spending/taxation rates, debt/GDP expected to hit 150% by 2047 if the current government spending picture remains unchanged.

The CBO’s revision from the last, 2016 projection, shows a marked deterioration in both total debt and budget deficits, with the former increasing by 5% to 146%, while the latter rising by almost 1% from 8.8% of GDP to 9.6% by 2017.

According to the CBO, “at 77 percent of gross domestic product (GDP), federal debt held by the public is now at its highest level since shortly after World War II. If current laws generally remained unchanged, the Congressional Budget Office projects, growing budget deficits would boost that debt sharply over the next 30 years; it would reach 150 percent of GDP in 2047.

In addition to the booming debts, the office expects the deficit to more than triple from the projected 2.9% of GDP in 2017 to 9.8% in 2047. The deficit at the end of fiscal year 2016 stood at $587 billion.

A comaprison of government spending and revenues in 2017 vs 2047 shows the following picture:

The CBO also mentions rising rates as another key reason for the increasing debt burden. The Federal Reserve has kept rates low since the financial crisis but is on track to gradually hike rates in the coming year.

On the growth side, the CBO expects 2% or less GDP growth over the next three decades, far below the number proposed by the Trump administration.

The budget office breaks down the primary causes of projected growth in US spending as follows: not surprisingly, it is all about unsustainable social security and health care program outlays.

The CBO’s troubling conclusion:

Greater Chance of a Fiscal Crisis. A large and continuously growing federal debt would increase the chance of a fiscal crisis in the United States. Specifically, investors might become less willing to finance federal borrowing unless they were compensated with high returns. If so, interest rates on federal debt would rise abruptly, dramatically increasing the cost of government borrowing. That increase would reduce the market value of outstanding government securities, and investors could lose money. The resulting losses for mutual funds, pension funds, insurance companies, banks, and other holders of government debt might be large enough to cause some financial institutions to fail, creating a fiscal crisis. An additional result would be a higher cost for private-sector borrowing because uncertainty about the government’s responses could reduce confidence in the viability of private-sector enterprises.
It is impossible for anyone to accurately predict whether or when such a fiscal crisis might occur in the United States. In particular, the debt-to-GDP ratio has no identifiable tipping point to indicate that a crisis is likely or imminent. All else being equal, however, the larger a government’s debt, the greater the risk of a fiscal crisis.

The likelihood of such a crisis also depends on conditions in the economy. If investors expect continued growth, they are generally less concerned about the government’s debt burden. Conversely, substantial debt can reinforce more generalized concern about an economy. Thus, fiscal crises around the world often have begun during recessions and, in turn, have exacerbated them.

If a fiscal crisis occurred in the United States, policymakers would have only limited—and unattractive—options for responding. The government would need to undertake some combination of three approaches: restructure the debt (that is, seek to modify the contractual terms of existing obligations), use monetary policy to raise inflation above expectations, or adopt large and abrupt spending cuts or tax increases.

Then again, as the past 8 years have shown, only debt cures more debt, so expect nothing to change.

Also, we find it just a little confusing why the CBO never warned of an imminent “fiscal crisis” over the past 8 years when total US debt doubled, increasing by $10 trillion under the previous administration.



Author: prisonplanet # RucuToju75
Home2017-07-13
-
 50%  ( 0 people voted )
+

Name:

What is tripcode?
A tripcode is a hashed password, by which you can be identified by others. This does not require registration and you will be still anonymous. Password is not stored on the server.
Tripcode:
(recommended)
What is this?
Anti-spam protection against robots. Please write this two numbers in decimal form.
tw   thre
(write in decimal)

By submitting this form, I Agree to the Terms and Conditions. Click here for whole text of Service Agreement.

Optional URL of video, picture or google map:








Best of week

Report: John McCain’s Brain Cancer ‘Particularly Aggressive Type’



        Report: John McCain’s Brain Cancer ‘Particularly Aggressive Type’
Chris Menahan Information Liberation July 20, 2017 The Associated Press is reporting the type of brain cancer John McCain has been diagnosed with is “particularly aggressive” and has a ...
Trump Declares ISIS ‘Falling Fast’ At Pentagon Briefing
North Korea 2016 Economic Growth at 17-Year High Despite Sanctions
Four German women who joined Islamic State detained in Iraq

Spy Tech: 10 CIA-Backed Investments


Spy Tech: 10 CIA-Backed Investments
Remember the Semi Submersible, the Digital X Ray Detector Panel, or the Dragonfly Insectothopter? They're artifacts in the CIA museum, a collection of spy gadgets, weapons, and memorabilia that ...
Are Black Friday Riots A Preview Of The Civil Unrest That Is Coming When Society Breaks Down?

Brits pay most taxes in the world - study


Brits pay most taxes in the world - study
A new study has revealed that households in Britain pay some of the highest tax in the developed world leaving the country “in the worst place to facilitate the creation of an aspiration nation” ...

N.Korea notifies IMO where its long-range rocket debris could fall


N.Korea notifies IMO where its long-range rocket debris could fall
North Korea has notified the International Maritime Organization of preliminary coordinates where the debris could fall of its long range rocket, which, Pyongyang says, will put a research ...

Detroit may go bankrupt unless City Council and Mayor strikes a deal


Detroit may go bankrupt unless City Council and Mayor strikes a deal
The city of Detroit may go bankrupt till the end of this year, with thousand of city workers put on furlough, unless the Detroit City Council authorizes a $300, 000 contract for financial advice to ...

China and its oil dependency – how well is the CCP approaching the crisis?


China and its oil dependency – how well is the CCP approaching the crisis?
Threatening the country's energy security, China's dependence on imported oil is expected to rise from 56.7 percent in 2011 to an astounding 58.6 percent in 2012. With the figures looking as grim as ...
Chinese army's branch in every university

Assassination of senior Russian weapons designer caught on tape


Assassination of senior Russian weapons designer caught on tape
A senior weapons designer working for a leading Russian defense industry enterprise was shot dead in what authorities suspect was a contract killing...

Former spy Mark Kennedy sues police for 'failing to stop him falling in love'


Former spy Mark Kennedy sues police for 'failing to stop him falling in love'
Mark Kennedy, who infiltrated environmental movement until his cover was blown, demands up to £100, 000 for 'personal injury'

British Lord Calls for Nuking Afghanistan-Pakistan Border


British Lord Calls for Nuking Afghanistan-Pakistan Border
Lord Gilbert, aka Life Peer Baron Gilbert, a House of Lords fixture, has suggested using a neutron bomb on the Pakistan Afghanistan border to clear out pesky natives who were radicalized by his ...


important actual news leaked informations spies spy espionage | Chemický peeling v Bratislave aha chemicky peeling v Bratislave Chemicky peeling Bratislava peeling aha kyselinami v Bratislave Kozmetický salón v Bratislave Kozmetika Bratislava | Kozmetický salón v Bratislave salón krásy Bratislava Kozmetický salón bratislava kozmetika Bratislava Kozmetika v Bratislave omladenie pleti regenerácia pleti beauty salon Bratislava | ultra high end - lip balms, custom made design, strawberry, chocolate, cocoa, mint | Hĺbkové čistenie pleti Bratislava Hĺbkové čistenie pleti v Bratislave Ultrazvukové čistenie pleti Bratislava Čistenie pleti ultrazvukom Bratislava Skin Scrubber Bratislava Kozmetika Bratislava Chemický peeling Bratislava
Version:1.22 2013-07-08 Generated in 0.1079 s | panel