International financial markets as well as most central banks tend to use the US dollar as the world’s primary reserve currency, since it is widely considered a safe-haven asset due to its global dominance and the USA’s economic and political stability.
However, in recent times the assumption of US economic stability has been challenged. In particular, a question that has been asked by many economists and policymakers is whether the has US finally borrowed too much. In other words, has the stock of public debt accumulated over the years by various US governments become too big? If so, is this a problem? Is the debt likely to grow even further? These are rather important questions when analysing a country’s economic performance both in the short and long run. In this article we investigate the issue and provide some initial evaluation of the US debt situation.
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