I haven’t seen that many people worried about this. But basically wondering if the ratios for debt to GDP/federal revenue to debt in the next few years could potentially lead to a collapse of the dollar and the global financial system.
In a nutshell, we are injecting $2 trillion into the economy, and potentially a $4 trillion more if Trump gets his way. I haven’t run the numbers in detail (forgive any errors), but in 2008 the US was sitting at 60% debt to GDP ratio and $9 trillion of debt. Last year, we had a deficit of $1.1 trillion despite our low 3.3% unemployment and record stock market. Debt is now $22 trillion, and GDP to debt is 105%, and federal revenue to debt ratio will skyrocket as tax revenues plummet in the coming years due to coronavirus, mass unemployment, and the closure of small businesses.
In a few years, could investors lose faith in purchasing US government debt? Would interest rates need to be raised to 10%? Are we looking at a Greece scenario with the US dollar, i.e. hyperinflation, austerity, and currency collapse?
Are we f*cked?