Sat, September 07, 2024 at 18:51

• 

  Kang-hoon

  • Hello, Annie.

  • Today, I want to discuss the recent surge in the US national debt.

  • Over the past three months, the debt has increased by over half a trillion dollars.

  • 
• Annie

  • Wow, that's quite a jump!😮 How much exactly has it increased by?

  
• 

  Kang-hoon

  • According to the U.S. Treasury, the national debt rose from $34.6 trillion on June 3rd to $35.3 trillion on September 3rd.

  • That's an increase of $684 billion.

• Annie

  • That's a massive amount in just three months.

  • What are the reasons behind this surge?

  
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• 

  Kang-hoon

  • The rise is attributed to the government's continued reliance on debt to fund expenses.

  • This includes various fiscal policies and spending programs.

• Annie

  • I see.

  • How has this affected the US credit rating?

  
• 

  Kang-hoon

  • Fitch, a major credit rating agency, has affirmed the US's long-term AA+ rating with a stable outlook.

  • However, they are not ready to upgrade it to AAA due to underlying fiscal conditions.

• Annie

  • So, what are the main concerns Fitch has mentioned?

  
• 

  Kang-hoon

  • Fitch highlighted high fiscal deficits, a substantial interest burden, and high government debt.

  • These factors are more than double the AA rating medians.

• Annie

  • That sounds serious.

  • Has the US government done anything to address these issues?

  
• 

  Kang-hoon

  • Unfortunately, the government has not made significant progress in tackling large fiscal deficits, the growing debt burden, or the anticipated increases in spending due to an aging population.

• Annie

  • What about the US dollar?

  • Does it still hold its status as the world's reserve currency?

  
• 

  Kang-hoon

  • Yes, the US dollar remains the world's reserve currency, which gives the US a significant edge over other nations.

  • However, Fitch warns that trust in the US and the dollar could erode if the country continues to rely heavily on debt.

• Annie

  • That makes sense.

  • What could be the potential consequences if the debt continues to rise?

  
• 

  Kang-hoon

  • Persistent increases in the public debt burden could make the US more vulnerable to economic and confidence shocks.

  • 

  • This could have far-reaching implications for the economy.

• Annie

  • Given all this information, would you say this news is good or bad for the market?

  
• 

  Kang-hoon

  • In my view, this is bad news.

  • The rising debt and lack of meaningful fiscal reforms could undermine economic stability and investor confidence in the short term.

• Annie

  • Thank you for the detailed explanation, Kang-hoon.

  • This really helps me understand the situation better.😊

  
• 

  Kang-hoon

  • You're welcome, Annie.

  • Always here to help you make informed decisions.

  • Upon comprehensive consideration, this news is perceived as a 😱Bearish.