US debt default Impact on Market:

 

The amount that a borrower can borrow to meet its liabilities is called the debt ceiling or debt limit. Presently the debt ceiling is about 31.5 trillion dollars. This limit was crossed in January this year. Then the Finance Ministry of America resorted to extraordinary measures instead of taking approval from the Parliament. The US Congress has been approving this to increase the debt ceiling or to postpone the condition of the debt ceiling for some time so that the government can raise more borrowings. Since 1960, the US Congress has either increased this ceiling 78 times or has postponed the implementation of its conditions for some time. US Treasury Secretary Janet Yellen has warned that if further borrowing is not allowed, the government may run out of money to repay its liabilities, and this may come as soon as June 1.

According to the New York Times report, America's budget deficit is very high. This means that the expenditure of the government is much more than its earnings. Due to this, he has to take a loan for his work. According to the Treasury Department of America, in March 2023, the budget deficit of the government there had reached Rs 30 lakh crore. According to research center PEW, in 2022, America's GDP was 121% in debt. It can be understood from this that to what extent the government there depends on debt for its expenses. In general, America is the most powerful and richest country in the world, but if we look at the debt data, America has the highest debt compared to GDP. It is mentioned in the BBC report that last year the GDP of America was 21.44 trillion dollars, but the debt on America was 27 trillion dollars. If this loan is distributed over the total population of 32 crores of America, then about 17 lakh rupees ($ 23500) is the loan on each person.

China's state media 'Global Times' wrote in a pinch on the cancellation of all foreign trips by Joe Biden due to this economic crisis that "Washington's behavior shows how America treats its allies and partners as chess pieces." When its domestic issues dominate its political agenda, it easily backs away from its commitments."The Global Times further writes that "the US continues to lose its hegemony by being stuck on the issue of its debt. Due to this, doubts have started to arise among its allies about its leadership and reputation."