As Americans ask whether President Obama’s US$819 billion stimulus package is enough, the rest of the world wants an answer to another niggling question: Where will all the money come from? The Congressional Budget Office recently forecast Washington will run up a US$1.2 trillion deficit next year, while independent forecasters peg the figure much higher. By some estimates America will need to borrow US$10 trillion over the next decade. Watching all of this warily are foreign central banks and investors who already own more than half of America’s debt, and will be asked to buy more. At the World Economic Forum in Davos, Switzerland, many are beginning to wonder how much more U.S. debt the world can swallow, according to the New York Times. One worry is that America’s hunger for cash will squeeze out other countries as they try to borrow to fund their own stimulus plans. Another is that the U.S. will be forced to print more money, thus driving up inflation and interest rates. One U.S. official tried to be reassuring. As soon as the economy bounces back, White House adviser Valerie Jarrett said, the country would “restore fiscal responsibility and return to a sustainable economic path.”
How much more U.S. debt can the world swallow?
Some worry the U.S. will be forced to print more money, driving up inflation and interest rates.
FILED UNDER: US politics