US inflation causes national outstanding debt to exceed $31 trillion

By Al Mayadeen English
Source: Agencies
5 Oct 2022 15:27
2 Shares

Data from the US Treasury reveals that the US national outstanding debt has exceeded $31 trillion for the first time in the nation's history.

US national outstanding debt reached $31.1 trillion (Getty Images)

US national outstanding debt exceeds $31 trillion for the first time in its history according to the US Treasury. This comes at a time when the US is faced with all-time high inflation coupled with high-interest rates, all of which deepen the economic uncertainty problem that the government, businesses, and people are all facing.

During the Covid-19 outbreak, the US government went on a borrowing binge aimed at shoring up the nation's economy as the pandemic heavily disrupted lives, labor markets, and supply routes.

At the start of 2020, the outstanding US debt had increased by over $8 trillion. And then in 8 months, it had increased yet another $1 trillion.

At the initial time of borrowing during the Trump administration followed by Biden's administration interest rates still hadn't risen. However, at this time, the Federal Reserve has exponentially increased interest rates making borrowing costs far higher than what they were projected to be.

The Committee for a Responsible Fiscal Budget (CRFB) forecasted last month that President Joe Biden's policies might raise deficits by $4.8 trillion between 2021 and 2031.

According to a CRFB statement “Excessive borrowing will lead to continued inflationary pressures, drive the national debt to a new record as soon as 2030, and triple federal interest payments over the next decade – or even sooner if interest rates go up faster or by more than expected.”

Alex Pelle, the US economist for Mizuho Securities, commented on the situation saying “Any type of debt issue is really a potential issue – I wouldn’t even say a certain issue – but a potential issue for five to 10 years down the road,” highlighting that “One of the benefits of being the world’s reserve currency is everyone wants to buy your debt for cheap.”

Pelle also argued that currently, the most significant US concern should be inflation and not the sky-high outstanding debt it has accumulated. He considered the outstanding debt to be a "very large problem," however, it is a very large problem in the future; long-term. In the short term, he explained high levels of inflation have a more severe impact on the country's economy.