Fitch Ratings' decision to downgrade the U.S. debt rating might just be the beginning of the economic disaster that awaits the United States. It's time to brace yourself for impact, because the U.S. government's debt is projected to increase by a staggering $5.2 billion each and every day over the next decade.
This eye-opening revelation comes from none other than Bank of America strategist, Michael Hartnett, who bases his calculations on projections from the Congressional Budget Office. The debt's growth is set to outpace the broader economy significantly. According to the CBO, the debt held by the public is expected to reach a staggering 118.9% of GDP by 2033, a notable jump from its current position of 98.2% in the present year.
Hartnett also draws attention to the ongoing involvement of central banks in bailing out Wall Street and the governments' commitment to aiding Main Street. Moreover, he predicts that, in light of the next recession and the ensuing fear of fiscal policy catastrophe, the policy destination for G7 nations will ultimately be yield curve control, heightening the risk of government defaults.
Japan, the only major economy currently implementing yield curve control, has started taking small steps to withdraw from it. Meanwhile, the U.S. had previously employed this policy during World War II and, more recently, discussions among Federal Reserve officials have explored the possibility of adopting it again.
Since the resolution of the debt-ceiling issue in Congress on May 31, commodities have emerged as the best performing assets. On Monday, the Treasury Department announced its plan to borrow $1.007 trillion in privately held net marketable debt this quarter and an additional $852 billion during the fourth quarter. That's $1.859 trillion in debt in just a five-month period!
During the first half of 2023 Yellen has already issued more than 1.3 trillion in new debt. So in total, we could be on pace for nearly $3.2 trillion in debt issuance in just one year, roughly double the rate of last year.