$474,930,000,000 Added To US National Debt Since January 1st As Ex-IMF Official Says America Now on Dangerously Unsustainable Path

A former deputy director of the International Monetary Fund (IMF) says the US is now racking up debt at an extremely dangerous pace.

Fresh data from the U.S. Treasury Department shows that the national debt rose from $33.990 trillion on January 2nd to $34.465 trillion on March 8th – an increase of more than $474.930 billion so far this year.

The surging national debt has caught the attention of Desmond Lachman, an economist who served as deputy director at the IMF from 1994 to 1996.

In a recent American Enterprise Institute blog post, Lachman warns that the US government cannot continue piling onto its balance sheet

“On one thing everyone can agree. Our public finances are on a dangerously unsustainable path. One indication of our budget problems is that at a time of cyclical economic strength, when the government’s budget should at least be in balance if not in surplus, the deficit is around 6% of GDP…

According to the bi-partisan Congressional Budget Office, these deficits will soon take our public debt to a record level of well over 125% of GDP surpassing the level reached at the end of the Second World War.” 

Lachman says if officials do not take drastic measures to correct its financial trajectory, the ballooning debt levels could force the Federal Reserve to bail out the US government.

“Our government borrows in dollars that the Federal Reserve can always print to cover the deficit. This makes it highly improbable that our government will ever default on its debt. However, the money printing that would be required to finance our government could lead to a dollar crisis and to a surge in inflation.

It could also invite the return of the bond market vigilantes and cause financial market turmoil.”

 

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