3 Reasons Why We Should Worry U.S. Debt is at Record High $22 Trillion

Almost everyone has a financial burden, so do the U.S. government.

At 11 Fev 2019, the U.S. Treasury Department reports that their national debt crosses the $22 trillion mark! *champagne popping* For real-time data, please (click here). 

(Taken from: https://twitter/com/NationalDebt)

So, why did the U.S. government take up so much debt in the first place?

Every borrower should understand this concept, debt is simply future money. The reason for someone to take up debt is because the borrower usually wants to buy something they cannot afford now, so they take up a loan and buy it!

Same goes to the U.S. government, they borrow money and ejaculate into the U.S. economy. Guess what happen? U.S. GDP is a bang! All the other key economic data includes inflation, unemployment rate,  PMI (Purchasing Manager Index) are all getting better since then. The economy of America is so great! *finger whistling*

But wait! What does it have anything to do with us, as a citizen?

"Even if you think that public debt just doesn't matter to economic outcomes, the thing you have to admit is that when we hit a downturn, governments are less likely to take significant steps if the debt is as high as ours is now," 

said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, to CNBC  via telephone.

Reason number 1, the government may not be so generous during the next economic downturn. 

Well, in case you didn't aware how did the government helped in 2008 financial crisis, the government launched not one not two but THREE times big-scale QE (Quantitative Easing) to purchase MBS (Mortgage-backed Securities), treasury securities and etc through OMO (Open Market Operation). In a few years time, the balance sheet shot up from 0.9 trillion to a whopping 4.5 trillion USD. Let's imagine if the economic turmoil were to happen now, can the Federal Reserve afford to throw another round of QE4 QE5 QE6...?

(Taken from: https://www.cnbc.com/2017/11/24/the-fed-launched-qe-nine-years-ago--these-four-charts-show-its-impact.html)

2nd reason for us to worry, these debts were serviced using FFR (Federal Fund Rate) 0.00% - 0.25% for the past few years. However, those good old times had ended in 2018. Going forward, let us wave goodbye to zero interest rate & open our arms to welcome new (Yes I mean higher) interest rate!

(Taken from: https://theworldnews.net/za-news/how-interest-rate-hikes-will-trigger-the-next-financial-crisis)

3rd, the modern banking system never handles this size of global debt before. We are still able to grab our sunglasses and enjoy the sea breeze at the seaside, get a summer vacation by letting our skin tanned by the sunshine. All of that with the condition of our government is still able to pay the interest. What if there is one day, we suddenly realize that we cannot pay back our interest or even the debt? 

Chill bro!

You and I are small potatoes for such a complex issue, let the pro get the work done. So for the time being, let's be well prepared ourselves against all odds first before becoming a busybody.