the U.S. Congress last week had to compromise, voted in favor of the resolution to raise debt ceiling of $ 1.2 trillion proposed by President Obama. In this way, since July last year, the public debt ceiling of the U.S. federal government has accumulated to improve the $ 2.1 trillion to about $ 16.4 trillion.
forecast, according to the Congressional Budget Office report released on the 31st, 2012 fiscal year, the U.S. federal government budget deficit will reach $ 1.1 trillion, which will be the U.S. government budget deficit for the fourth consecutive year break one trillion U.S. dollars. At the same time, the accumulated national debt in the United States has reached a symbolic turning point – since World War II, the debt for the first time more than the economic output: the government’s debt, plus projects and other government retirement project to fight the IOUs, more than 15.23 trillion U.S. dollars. According to the latest estimates of the total U.S. economy in September 2011, to $ 15.17 trillion. This does have a very large warning.
during World War II and its aftermath, the United States has a three-year debt more than economic output. In 1981, debt fell to 30% of the gross domestic product (GDP). President Reagan during the debt proportion is gradually increased, and in the next 12 years to double. Recently, the 10-year total debt tripled in size. While the scale of the U.S. total debt is even more alarming, especially government debt has accounted for 65 percent of GDP, is the highest level since the 1940s. Last year, just to improve the debt ceiling was almost spent all the money, the current U.S. public debt is $ 15,193,975,000,000 statutory debt limit is $ 15.194 trillion, only $ 25 million from the debt ceiling, the U.S. debt dependence has been as high as 67%, far higher than before four decades the level of 37%.
in the second quarter of last year, due to the debt crisis in Europe, the European sovereign bonds have been substantial sell-off in global capital into the U.S. debt markets, including U.S. Treasury bonds and other bonds, including U.S. dollar assets have sought after. The data show the U.S. debt over the past three quarters of the cumulative capital net inflow amounted to $ 39.605 billion, of which U.S. agency bonds index and long-term corporate bond index in the beginning of the year were up 15.0% and 12.18%, and even the “two rooms” mortgage-backed securities also rose more than 4%. U.S. Treasury yields continued downward since the third quarter of last year, the U.S. benchmark 10-year Treasury yields last couple of slightly wounded below 2%, marking the lowest level in history, the U.S. national debt has been an unprecedented overestimate the bubble grows bigger and bigger .
However, the United States never seem to worry about U.S. debt to be sold, because this is determined by the rigid structure of the debt. In the composition of the U.S. Treasury, in addition to other departments of the government (including the Federal Reserve, the various funds of the government, etc.) and holds about 40 percent of U.S. resident investors hold about 30%, foreign investors held about 30%. China’s holdings of U.S. debt accounted for 8%.
similar to the Chinese situation, most of the trade surplus accumulated by resource exports and commodity exports in emerging countries are active buyers of U.S. debt. From 2000 to 2008, the 10-year U.S. Treasury yields fell by an average of 40%. In recent years, the U.S. Government’s annual borrowing, including debt refinancing size an average of more than $ 4 trillion.
As a result, the United States as the world’s largest debtor countries the debt not only did not constrain, but to become a tool to maintain financial hegemony. Liabilities of the United States is almost entirely denominated in dollars, by virtue of the “dollar standard” system not only support the international circulation of its debt, can also use monetary valuation effect, increase the national wealth through monetization of the debt or a disguised devaluation, but the creditor country’s sovereign wealth risk long-term debt risk with the United States, the monetization of debt has been rising. Over the past 10 years, the total foreign exchange reserves of emerging and developing countries increased from about $ 750 billion (equivalent to 11% of GDP) to nearly $ 6.3 trillion, accounting for far more than 50 percent of the global reserve asset.
from the 1970s, the Bretton Woods system collapsed so far, the U.S. dollar against gold dropped nearly 100%, especially in this century, the price of gold rose more than six times, while the devaluation of the dollar index over 36%. The long run, sea level continues to rise of U.S. debt, and monetization of the debt resulting from the depreciation of the dollar, the national real purchasing power and sovereign wealth facing large losses. Monetary policy, exchange rate policy and national financial security have been placed under great risk, long-term cheap dollar and cheap capital will allow the States bogged down in a painful imbalance.
Therefore, despite the U.S. Treasury investment status is difficult to replace, but China’s foreign reserve assets to not only to consider the liquidity, profitability, strategic and forward-looking to be considered. Between China and the U.S. credit and debt dependency must be broken, and continued holdings of U.S. Treasury bonds of the times I am afraid that is undergoing important changes.
U.S. debt appears to be safe assets, however, the risk of potential holders of U.S. debt is growing. Since the financial crisis, the United States to implement the essence of quantitative easing is the monetization of the debt, the U.S. private debt the state “, and then the” internationalization of the national debt, so that other countries pay for the crisis in the United States, the Federal Reserve with the amount of days bond purchase plan support the global mobility strategy behind it is to speed up the transfer of global wealth redistribution. Seemingly safe debt, in fact, debtors and creditors firmly tied to the chariot of the risk to become the world’s “most unsafe” assets.
United States has raised the debt ceiling means the QE3 provide the bullets. Next, in order to prevent the spillover effects of the debt crisis in Europe, as well as to save the weak real estate market in the United States, the Fed launched QE3 of the growing possibility. January 25, the U.S. Federal Reserve Board announced that the low federal funds rate of 0 to 0.25% will continue through at least the second half of 2014, if the deterioration of the economic recovery is likely to launch new loose monetary policy initiatives. If the emerging economies as well as the creditor nation to the purchase of bonds and other forms return to the U.S. to further enlarge the liquidity of the dollar, global inflation will come back.
(of the Department of State Information Center forecasts the Ministry of Research Associate)
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