The Currently Proportional Relationship Between The U.S Economy And U.S Government Debt

The U.S economic situation is currently in a weird condition where it has been experiencing a boom, but it is also characterized by escalating government debt.

The U.S economy has traditionally been self-correcting. Financial regulatory authorities take measures to achieve a balance between budget shortfalls and economic growth. Such measures include interest rates regulation. Weaker growth usually results in unemployment, and as such, the government collects fewer taxes. The government, therefore, adopts emergency measures to stabilize the economy. However, the situation is currently different and unusual because both debt and economy growth have directly proportional growth.

A recent economic report revealed that the budget deficit has never been as high as it currently is at such strong economic levels. The current performance, therefore, highlights the uncertainty about future financial performance considering its currently unique nature.

An economic recession might happen soon

Some analysts are convinced that the U.S economy will soon experience a recession. Part of this belief is the fact that the Federal Reserve has been raising interest rates more frequently. Jerome Powell, the current Federal Reserve has so far raised interest rates seven times within the last two years.

David Rosenberg, a Canadian economist, stated that the current economic characteristics in the U.S are similar to those of the economy at the time of the 1929 economic crash. Rosenberg claims that there is an 80 percent and above chance that an economic recession is coming based on the Federal Reserve?s tighter policies and interest rate manipulation.

Possible actions to improve the situation

Former Congressman Ron Paul believes that the free market should determine the interest rates. He claims that the Federal Reserve does not know what the interest rates should be and that it just shifts the rates up and down based on economic performance.

Paul is also against the Federal Reserve?s existence and believes that the best way forward is to abolish it. He also believes that cryptocurrencies such as Bitcoin can help prevent a FED-incited economic recession. Paul was interestingly anti-crypto a while back but is now preaching for their adoption.

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