America loves debt!
Currently, the country is more than 14-trillion dollars in debt.According to the congressional budget office, nearly 200-billion dollars of interest was paid out to public debt holders in 2010. With its own accounting in such disarray, many say America has lost legitimacy to lead the world on economic issues.
In a city that never sleeps, the National Debt clock in mid-town Manhattan outpaces the people, ticking at more than ten-thousand dollars per second.
“When it was first installed, no one was really aware of what the debt was, nor could most people tell you the difference between the deficit or the debt. So the debt clock stands vigil, keeping track of the national debt,” says Jordan Barowitz.
Barowitz represents the Durst Organization, the New York real estate firm that operates the ticker that charts America’s borrowing. The New York City national debt clock was installed back in 1989, back when US debt was under three-trillion dollars.Within weeks of now, that number is expected to reach a debt ceiling of 14.29-trillion.
“Clearly the government is borrowing too much money. Everybody knows that and everybody accepts that. It’s how you solve that problem that’s the real challenge,” says Barowitz.
The familiar financial problem has been met with a recycled solution.US leaders have called on Congress to raise the debt limit, warning of an economic Armageddon otherwise. Economic experts say ongoing financial mismanagement by the richest country in the world is gravely tarnishing America’s image as a global financial leader.
“We’re approaching national debt on par with the total GDP with the country. This is very serious because most economic research suggests that countries tend to decelerate in their growth and have more and more severe economic problems, once their debt to GDP ratio gets above ninety percent. And we’re about to go through that level,” said financial analyst, Max Wolff
Michael T Snyder of The Economic Collapse Blog says that raising the debt ceiling is absolutely necessary at this point. “If we don’t raise the debt ceiling, there is going to be chaos,” Snyder said in an exclusive interview with RT. “We need to or we’ll have a financial meltdown.”
If the US government reaches its borrowing capacity; it would ultimately default on its debt and stop paying investors whose bonds have come due. Japan currently holds roughly 885-billion dollars in US treasury bonds. Meanwhile, China, America’s main creditor owns $1.1 trillion. The circumstance has caused many to conclude that Washington no longer claims supremacy over global economic issues.
“It can no longer act unilaterally on any number of things. Part of what the United States needs is credibility which can increase the persuasion with which it can convince other countries to come together with it in moments when it needs to,” said Erica Payne, founder of the Agenda Project.
As the guarantor of the global financial system shows no sign of debt discipline, Nobel Prize-winning economist Joseph Stiglitz says it’s time to replace the once invincible US dollar with a new reserve currency.
“China has close to 3 trillion dollars of reserves—About one-third of the global reserves; about nine-trillion dollars. When you're holding three trillion dollars, you have some voice in what kind of reserve currency system you want to have and China’s been very clear that it worries about the current dollar based reserve system,” says Stiglitz.
Michael Snyder said no matter the solution, action needs to happen more sooner than later “Something dramatic needs to be done. Just tinkering with our current system isn’t going to get it fixed,” he says.
Just last week, the dollar fell to nearly a 15-month low against the euro. Yet day after day, America’s debt digits continue to climb higher.
US Congress has increased the national debt ceiling a reported 74-times since 1962 and it will most likely happen again in the coming weeks. But as America continues accruing trillions of dollars in debt, the bigger question becomes, how much global economic influence does this so-called superpower stand to lose?