Tuesday, December 4, 2012

US debt expected to cross $17 trillion by April

The rate of increase in US external debt holidngs seems to be acceleration.

US total external debt has crossed its GDP figures in November 2011. It took hardly another year for it to add another trillion to cross $16 trillion in September 2012. Now in just 2 months, debt seems to have galloped by another 340 million.

At this rate by the end March or early April, it will cross the 17 trillion mark, making it 110 % of US GDP.

What is to be noted is that at teh current bond yields, it will easily consume almost 2 % of US GDP growth to pay off the interest of US's external borrowings.

Hence for US economy to growth by 1 % , it in fact has to effectively grow by 3 %.

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