Winning Bizness Desk
Mumbai. The United States of America's economic affairs are getting worse day by day as the daily earnings of the world's largest economy have come down to $13 billion while the expenditure has reached more than $17 billion. The condition has become such that only $49 billion is left in the government's account and the US Treasury's cash balance decreased by $20 billion this week. The Treasury Minister has warned that the country will become a defaulter on June 1 if the debt ceiling is not raised. Talks are going on between Republican and Democratic leaders to increase the debt limit, but no deal has been reached so far. Meanwhile, rating agency Fitch has warned that the top ranking of the American may be affected.
value of its government bonds to lose grace
The situation today is that Japan's investment in US government bonds is $1.1 trillion, while China's is $870 billion. That is, if America defaults, then both of them can get a big blow. US defaulting can cause a fall in the value of its government bonds. This will also reduce the foreign reserves of Japan and China. That means they will have less money to pay for essential imports and foreign debt. Due to America's default, the economy there can get stuck in recession. If this happens, its effect can be seen on the whole world. China's economy has not yet recovered from the effects of the corona virus, while recovery has now begun in Japan.
It will affect the whole world
Experts say that if America defaults, it will affect the whole world and the global economy may come under the grip of recession. This will increase the cost of borrowing for the US government and the people. It will also have a huge impact on the country's economy. The debt limit is the limit up to which the federal government can borrow. Since 1960, this limit has been increased 78 times. Last time it was increased to $ 31.4 trillion in December 2021, but it has gone beyond this limit.
China and Japan's fate depend on USA
The second largest economy China and the third largest economy Japan are praying that this does not happen. His breath is stuck. This is because China and Japan are the largest foreign investors in US government debt. Foreign governments hold US$7.6 trillion in government bonds. Of this, more than a quarter i.e. two trillion dollars is with China and America.