US economy is in REAL trouble , it not just speculation , the US government is borrowing at a staggering rate and there is not end in site to this borrowing , the debt ceiling that was set for government borrowing till now has been 14.90 trillion dollars , the US is or is about to reach this ceiling.
This is like maxing out on your credit card in simple terms.. lol
Then to finance their debt, they sell T-bills, China and Japan re-invest their dollars in the US by holding a piece of their US government’s debt when they buy the T-bills , the treasury bill is considered to be a 'safe' investment.
Towards those who buy the T-bills, the US government is in a binding contract that they will pay back with the interest the amount the US gov has borrowed from the one who purchase the T-bills.
In other words US owes money to China [and Japan also] , suppose if the US default on payments back to China .. It’s hard to say what can really happen but it will be a huge economic disaster that will hit the entire world and can potentially lead to war also.
Default also means that the gov programs that the US is running will suffer huge setback , this can also mean US troops going without salary, it will be interesting to see if they still fight on in such a scenario.
Currently the Federal reserve is going on printing dollars but this practise cannot be kept up indefinitely, the interest rates are still very very low in the US and when you print so much dollars with such low interest rates then eventually inflation will go up and the value of dollar will dip.
I mean its quite amazing to see that even the Pakistani rupee rose against the dollar a few days back [ even if by only a few paisa ] , there is surplus dollars in the market and sooner or later this will have negative impact on the dollar.
So all it not well for the US economy and apart from doing gangster type default and telling off those whom they owe money there is not shot way out of their worries.
The US system has maxed out the road ahead will be tough for the US economy and they cannot afford large scale wars anymore. They have squandered off what ever surplus they had in 2001 over the last 10 years
History does indeed repeat itself; the Crusaders that went on a rampage in the end went back bank erupted and unable to capture the prize that was Jerusalem