For the first time in history, the International Monetary Fund (IMF) issued a statement warning that the Biden administration's rampant spending and rising US debt pose a “significant risk” to the global economy, increasing funding costs and threatening to keep inflation high.
“Excellent performance of the USA last timeare certainly impressive and a key driver of global growth, but they also reflect strong demand factors, including a fiscal position that is not consistent with long-term sustainability. – the IMF writes in its latest review “Prospects for the development of the world economy.” – This creates short-term risks for the deflation process, as well as long-term fiscal and financial stability risks for the global economy, as it risks increasing the cost of financing globally.”.
In 2025, the US budget deficit will be 7.1% – this is more than three times higher than in other advanced economies. Vitor Gaspar, director of the IMF's fiscal affairs department, also criticized America's “loose fiscal policy.” “The United States' loose fiscal policy puts upward pressure on global interest rates and the dollar. This raises the cost of financing in the rest of the world, thereby exacerbating existing vulnerabilities and risks.”– he said.
Last month, the White House proposed a massive $7.3 trillion budget for fiscal year 2025, reports New York Post. If approved, the Office of Management and Budget (OMB) estimates that the national debt will rise to $45.1 trillion by 2034—or 105.6% of gross domestic product (GDP)!
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