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U.S. National Debt Continues to Surge: It Won’t End Well Lombardi Letter 2021-02-03 03:26:51 The U.S. national debt remains one of the biggest elephants in the room. It’s one of the least talked topics, but it has serious long-term ramifications. Could the soaring national debt lead the U.S. government to default? U.S. Economy https://www.lombardiletter.com/wp-content/uploads/2021/02/concepts-of-liabilities-and-taxes-that-must-be-paid-a-wooden-block-on-stacked-coins-growth-up-on-wood_t20_rRRzbJ-150x150.jpg

U.S. National Debt Continues to Surge: It Won’t End Well

U.S. Economy - By |
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U.S. National Debt Stands at $28 Trillion & Continues to Grow

The U.S. national debt continues to increase at an alarming pace, which could bring a lot of problems. The federal debt is possibly one of the most ignored topics of discussion these days, but it shouldn’t be ignored whatsoever.

It’s perfectly fine for the national debt to increase in the short term. At times, governments need to spend money to help the ailing economy—or to make large investments for other reasons. However, if the debt continues to increase regardless of economic conditions, you really should question it.

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Currently, the U.S. national debt stands awfully close to $28.0 trillion. (Source: “The Debt to the Penny and Who Holds It,” TreasuryDirect, last accessed February 2, 2021.)

Over the years, the debt has only grown. Donald Trump’s administration didn’t do anything about it. In fact, the Trump administration spent without remorse. Mind you, during the Trump years, the U.S. economy was supposedly doing well, but the national debt still soared.

Prior to that, Barack Obama’s administration didn’t do much about the debt either. The Obama administration racked up massive deficits, which led to a huge increase in the U.S. national debt. Surely, government spending was needed after the 2008 financial crisis, but the U.S. government never stopped spending.

But there’s no real point in talking about who did what. What’s worth discussing now is what’s ahead, and how the ever-rising U.S. national debt could have a severe impact in the long term.

Don’t Be Shocked to See U.S. Debt at $35 Trillion Soon

Here’s some perspective: if the U.S. government gets its act together right now and the national debt remains at $28.0 trillion, the interest expense on this debt is still expected to be $575.0 billion this year alone. (Source: “Monthly Treasury Statement,” U.S. Department of the Treasury, last accessed February 2, 2021.)

But the U.S. government getting its act together is probably one of the least likely scenarios at the moment.

The federal government is expected to spend a lot of money in the coming years. There’s really no balanced budget in sight for at least a decade. With this, you can bet that the U.S. national debt will go much higher. Don’t be surprised to see it soar to $30.0 trillion—or even $35.0 trillion—in a matter of a few years.

What Will Happen as U.S. National Debt Continues to Soar

Dear reader, I see the national debt as a giant elephant in the room that no one seems to be talking about.

High debt eats future growth. The higher the U.S. national debt goes, the bigger the interest expense is—and the overall amount keeps getting bigger, even if the government puts a complete halt to spending.

I study history quite a bit in my free time, and I look at what happened to nations that had immense debts. Here’s what you need to know: there comes a point when a country with a high debt has to come clean and say to its creditors, “We can’t pay you.”

You don’t have to listen to just me; do your own research. History books are filled with examples of major nations defaulting on their debts because they couldn’t keep up.

Right now, no one thinks the U.S. government will default on its debt. I’m not saying that either, but, over time, it becomes unsustainable for a country to carry a massive debt load. Could the U.S. be on track to eventually default on its debt? I think it’s possible.

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