The Chicago Tribune has published a story over the weekend about the mounting debt that the United States is incurring. If you do not count intra-government loans, the United States has a debt to GDP ratio of 52%, according to the CIA (the graphic says 53%). If you do not ignore the United States Treasury bonds held by Social Security, Federal Employees, Medicare and Medicaid, then the debt to GDP ratio rises to 89%, based on the U.S. National Debt Clock.
The biggest immediate danger posed by the debt, Sawhill said, is that U.S. Treasury securities, the world’s favorite “safe” investment, won’t be seen as quite so safe by foreign lenders, who currently own more than half of all publicly held U.S. debt. If those foreign lenders decide to invest elsewhere — last December foreign demand for U.S. Treasuries fell by the largest amount on record — it could force the government to raise interest rates in order to make its debt more attractive. That could have a ripple effect on interest rates domestically, making it more expensive to borrow money to buy a home or a car, or for businesses to borrow money to expand.
via National debt: A tsunami of red ink @ chicagotribune.com.
