The US National Debt Is Rising Nearly $10B Per Day, But the US Dollar’s Strength Would Have You Think That’s No Problem – The Average Joe
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    The US National Debt Is Rising Nearly $10B Per Day, But the US Dollar’s Strength Would Have You Think That’s No Problem

    Noah Weidner

    April 19, 2024

    Does debt matter? For the average American, definitely. But for the US government? Not so much. The US has been operating in the red for the vast majority of its existence — issuing bonds to fund everything from wartime efforts to scientific advancement. But since 2001, the national debt has ballooned to $35T and is only accelerating.

    America’s debt problem: Thanks to higher interest rates, the national debt is now rising nearly $10B per day. That’s drawn the ire of the International Monetary Fund (IMF), which warns that the country’s spending habits aren’t just a possible problem at home— but also a global risk to economic stability.

    • The IMF says US government spending is “out of line with long-term fiscal sustainability” and warns that funding costs could spark higher inflation, destabilizing less-industrialized nations.
    • Factors contributing to this surge in debt include the pandemic, Republican tax cuts, and bipartisan investments in infrastructure — creating multi-trillion dollar deficits over the past three years.

    Dollar in demand

    Despite the IMF’s warning, the IMF conceded that some of the US’s spending has fueled its strong economy and, in turn, global growth. That makes last year’s $1.7T deficit, the third-highest since 2001, seem a little less innocuous. But the side effect of all that spending has been stubbornly high inflation, which risks keeping interest rates higher for longer. And after March’s strong inflation read, analysts predict just 0.38% of interest rate cuts this year — a trend that favors the US Dollar.

    • Since the start of the year, the US dollar index, measuring the greenback’s strength against other major currencies, has unexpectedly risen by 4.6%.
    • The USD now commands record premiums against the Indian rupee and is at its highest against the Taiwanese dollar and Japanese yen in nearly a decade.

    Time to get overseas: The strong Dollar has given Americans an advantage abroad — fueling record tourism to destinations like Japan, which saw its highest-ever monthly visits in a single month in March. But this strength has also caused panic across global central banks, striving to shield their economies from the escalating costs of imports priced in USD. For US consumers, even if you’re not in the market for large orders of semiconductor chips, a trip to Asia could be a fun way to capitalize on the Dollar’s strength.

    Read: Is that why a record number of US adults are planning trips abroad?

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