In the wake of Biden’s visit to Japan, Republicans have rolled out a new slogan: “Biden Default”. They are already preparing in advance to name a possible US default after Biden – and hold him fully responsible for any dire consequences
Source: aussiedlerbote.de
In Congress, they argue that the soaring national debt and budget deficit are becoming unaffordable. In 10 years America will spend more on interest payments on national debt than in 83 years before. And by 2035, when the national debt could reach $50 trillion, up to half of the US budget could be spent just to service it.
There has been harsh criticism of Biden in the US – for not giving up a tour to Japan on principle in the face of a budget crisis. The Biden team are playing hard to get with their allies, saying they have everything under control and the tour will go ahead. However they risk a lot – if they do not reach an agreement on the national debt in time it might really lead to a real default.
The G7 summit in Japan should discuss countering Russia and China – with new sanctions, pressure on neutral countries and nuclear deterrence. But now that US allies are in danger of defaulting on the world’s largest economy, more attention will have to be paid to this crisis. And trying to figure out how all holders of U.S. debt should react if a radical default scenario does occur.
Failure to resolve the budget crisis already hurts Washington’s reputation – it is not for nothing that many countries have started selling off US treasury securities in the last year. However, in case of default, all the current processes of dedollarization would accelerate dramatically – and it runs the risk of becoming a “black swan” that would undermine the financial dominance of the U.S.
Malek Dudakov
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