The Consequence Of America’s Massive Debt
Published: 2023-04-21
Status:
Available
|
Analyzed
Published: 2023-04-21
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
US national debt is projected to reach $50 trillion within the next 10 years.
"over the next 10 years the United States is estimated to reach 50 trillion dollars worth of debt"
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In 2023, the US is estimated to pay approximately $900 billion in interest on its national debt.
"in 2023 for example the us will have to pay roughly 900 billion dollars in interest payments alone"
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US interest payments on debt in the current year will exceed the entire military budget.
"so this year we're going to spend more interest on the debt we owe than on the entire military budget"
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A US debt default in 2011 led to a 15% drop in the S&P 500 and the first-ever downgrade of the US credit rating by Standard & Poor's.
"the S P 500 was down 15 percent and it wasn't just the stock market that lost 15 percent it was also the U.S credit rating which was downgraded for the first time in the history of the rating"
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Standard & Poor's downgraded the US credit rating from AAA to AA+.
"Standard and Poor's downgraded the United States credit rating late Friday the agency said it is cutting the country's top AAA rating by one notch to double A Plus"
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If the US government cannot raise the debt ceiling, it could run out of cash by June, leading to delayed Social Security checks, tax refunds, furloughed employees, and closed national parks and museums.
"they basically run out of cash for programs that exist around June the treasury secretary estimates it could mean delaying Social Security checks delaying tax refunds furloughing government employees and even closing national parks and museums"
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The US government experienced a shutdown in 1995-1996 due to a dispute over the debt limit and government spending between Republicans and President Bill Clinton.
"the government briefly shut down in 1995 and 1996 when Congressional Republicans and President Bill Clinton feuded over the debt limit and government spending"
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Failure to raise the US debt ceiling could trigger a massive global recession and potentially jeopardize the dollar's status as the world's reserve currency.
"massive Global recession how's that for putting it in plain English here right I mean dollar is the reserve currency of the whole world and it might not be if we go above the debt ceiling"
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Nobel Prize winner Paul Krugman suggests minting a trillion-dollar platinum coin as a solution to the debt ceiling crisis, citing a law that allows the Treasury Secretary to mint coins of any denomination.
"He suggests the treasury secretary could mint the coin mint the coin hashtag is even trending on Twitter a potential failure to raise the dead ceiling has the potential to be catastrophic in the event of something catastrophic sometimes you might be willing to do things that are weird or different to avoid a catastrophe there's a law which states that the treasury secretary at the Secretary of discretion can mint a coin of any denomination so why not mint a trillion dollar coin"
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It is technically possible for the US to pay down its national debt, but it is unlikely to happen.
"the answer is technically no but yes it's possible that we pay down the debt but we probably never will"
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Borrowing money can be beneficial for the US if it is reinvested to increase GDP.
"it's a good thing to borrow money as long as the US can use that money to reinvest back into itself to increase its own GDP"
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If the US loses its world reserve currency status, more dollars will remain domestically, leading to higher inflation, increased interest rates, and subsequently higher unemployment and slower economic growth.
"if we do that means more dollars will stay at home that translates to higher inflation which translates to higher interest rates to fight inflation which translates to higher unemployment and slower economic growth"
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