3 top experts detail how they see a possible US.jpeg
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Goldman Sachs said that senior experts are a warning about the potential debt crisis.
The bank conducted an interview with three positives of the economy about their view of the American financial situation.
Below is more important visions than Ray Dalio, Ken Rojov and Nyal Ferguson.
The investor’s concerns about the burden of government debt were swollen last week. But some experts say that the United States has not yet left the forest.
Goldman Sachs spoke to three senior economists – Ray Dalio, Ken Rojov, and Nyal Ferguson – about the high levels of debt in the United States. The three said they were concerned about the imminent debt crisis, especially when considering the effects of the Republican Party’s bill and spending on the Republican Party’s tax, Donald Donald, who can add trillion to the budget deficit during the next decade.
This reflects a slightly pessimistic view of the market. After intimidating last month, the demand for government bonds has long been strong this week. It was a sign that investors were more comfortable about the financial situation in the United States, after showing the nerves last month after Moody classified the debts of the United States and started the Trump tax bill on its way through congress.
Below are the most important points that each of the experts had to make:
Ray DalioJEMAL COUNTESS/Getty Images for time
The billionaire hedge fund manager said he sees three factors that define US debt forecasts.
How much the government pays the debt interest As for its revenues. If interest payments continue to rise, they can “unacceptable” prevent the government from spending money on other things.
How much does the government need for sale As for the request. If the government needs to sell more treasury more than people ready to buy, interest rates will have to rise. This provides a more attractive return for investors to retain US debt, but high rates hurt the markets and economics.
How much money the central bank needs to print In others to buy the remaining debts. If the demand for US Treasury bonds is especially weak, the Federal Reserve to buy bonds can intervene to maintain government financing. If she has to print more money to do so, this can raise inflation and give up the value of the US dollar.
“One can easily measure the signs of deterioration and vision of the movement towards an imminent debt crisis,” said Dalio, who has long warned of disturbing debt dynamics in the United States. “Such a crisis occurs when the constriction of debt -funded spending occurs, such as an economic heart attack resulting from debt.”
To prevent a crisis, Dalio said he believed the government should reduce the budget deficit to 3 % of GDP. Debt reduction may lead to a decrease in interest rates from about 150 basis points, as it was estimated, which reduced the payments of the benefits on the national debt and motivated the economy.
Kenneth RogeovFarok Pingo/World Economic Forum
Looking at the current Trump agenda, Rojov believes that the United States is likely to fall into a debt crisis during the four years to the next five. This is faster than the five -year time schedule that he predicted before Trump’s re -election.
“The idea that the debts is a free lunch that has been paid by many economics observers,” said Rooff. “The biggest deficit today at the top of the already high debt levels is to create a crisis that requires a major adjustment.”
Rojov believes that the debt crisis can play in two ways:
Economic inflation Nails lead to economic shock. “Exactly what this shock will seem to be difficult to say, but it is likely that it is more painful than the shock of inflation, which has just precipitated relatively simple adjustments in the bond markets,” Rojov said.
The government can manage debt By maintaining interest rates artificially low and restricting capital flows. He said that these measures will harm economic growth and serve as a tax on savers in the economy.
Roger said that investors have been concerned for a long time from the debts of the United States, but the view of concern in particular now because long -term interest rates pass “normalization” from the low levels that have spread over the past decade.
“People need to realize that the high interest rates here to survive and that returning to the past era is low in the past may prove to think of wishing,” he added.
Nyal FergusonDavid Livinson/Getty Pictures
Ferguson believes that the crisis can cause a military challenge that leads to the loss of the United States as a global power, as it deepens debt.
British American financial historian said his favorite measure is to determine the extent of the unusual national debts when a country spends more on the benefits of its debts more than defense.
This rule, which is called “Ferguson law”, is now applying to the United States, which has spent $ 1.1 trillion on interest payments on national debt during the 2024 fiscal year, according to the Treasury Department. More than 883.7 billion dollars was accredited this year to spend the total defense.
He said that almost every nation has violated Ferguson’s law that has lost its status as a “great force” in the financial markets.
“Any great force follows a reckless financial policy by allowing the cost of its debt to exceed the cost of its armed services is to open itself to a challenge,” said Ferguson. “The United States is just the latest great power to find itself in this financial jam.”
Ferguson said that the United States has managed to borrow as much as it was until now without any problems, in part, due to the fact that the US dollar is still the world’s reserve currency and investors still see the treasury “free of risk”, which means that they trust the United States’s ability to achieve interest payments.
But it seems that this may already turn, referring to investors all over the world as they are receiving their exposure to the United States Treasury and moving away from the assets in dollars.
Ferguson added: “I warned that the United States was on a financial road that has not been sustainable for 20 years, and thus I sometimes felt that he was the boy who cried the” wolf. “
