Doom and gloom financial pundits have long cited America’s growing debt as a reason why a market crash is inevitable. Despite these claims, which started decades ago, the markets still haven’t witnessed this massive crash forewarned by these experts, even if the government debt has continued to go up exponentially. According to newly updated data, the total U.S. national debt officially exceeded $30 trillion, the first time in history.
The Treasury Department said that, as of January 31st, America’s total public debt outstanding grew to $30.01 trillion. That’s more than a $7 trillion increase compared to January 2020, just before the coronavirus pandemic first hurt the economy. This total debt is both the public debt as well as the intragovernmental debt combined.
“This is a jaw-dropping number that is a real cause for concern,” said Maya MacGuineas, head of the nonpartisan Committee for a Responsible Federal Budget. “It is the result of both borrowing for really important crises, most notably the Covid pandemic, but also trillions and trillions of borrowing for no reason other than politicians have stopped being willing to pay the bills.”
This massive debt milestone has been hit just around the time that previous financial aid programs are expiring. Many of which were started back in 2020 as the crisis continued to worsen but are now leaving Americans as the coronavirus pandemic is all but quieting down. Although new cases are popping up, they aren’t hogging the media’s attention in the same way they were a year ago.
According to some estimates, as many as 70% of all U.S. dollars now in circulation have been effectively “printed” into existence during these past two years. Once again, this has largely been due to the pandemic, although it’s been going on for long before that.
Obviously, this has only amplified inflation fears. However, even inflation hasn’t shot up as much as some had worried it would. While the consumer price index has shot up to 7%, a lot of that could be attributed to high oil prices, as well as the ongoing supply chain situation.
However, the big reason for concern among some investors right now is that these record-high debt levels and record high CPI numbers have emerged following a long period of low-to-zero interest rates. Now that the Fed is expected to report several interest rate hikes this year, many bearish pundits are predicting this will be the catalyst for a massive market crash.
Many nonpartisan groups lobbying for deficit reduction have warned that these sky-high debt numbers are going to hurt future generations. Even Treasury Secretary Janet Yellen spoke a bit on the topic last month during a World Economic Forum meeting.
These high debt levels also have a political impact as well. Key trillion-dollar spending plans for education, healthcare, and climate change have been sidelined as Senators question how the government will be able to pay for these programs. Many now believe that U.S. will never be able to pay off its debt, let alone cover its interest payments, nor even simply balance its budgets ever again.
