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<\/a><\/p>\nINTRODUCTION:<\/h3>\n
The\u00a0national debt of the United States<\/b>\u00a0is the\u00a0debt\u00a0carried by the\u00a0federal government of the United States. The\u00a0public debt\u00a0is measured as the value of the currently outstanding\u00a0Treasury securities\u00a0that have been issued by the\u00a0Treasury\u00a0and other federal government agencies.<\/p>\n
The terms\u00a0national deficit<\/b>\u00a0and\u00a0national surplus<\/b>\u00a0usually refer to the federal\u00a0government budget balance\u00a0from year to year, not the cumulative amount of debt.<\/p>\n
There are two components of gross national debt:<\/p>\n
- \n
- Debt held by the public, such as Treasury securities held by investors outside the federal government, including those held by individuals, corporations, the\u00a0Federal Reserve System, and foreign, state and local governments.<\/li>\n
- Debt held by government accounts or intragovernmental debt, such as non-marketable Treasury securities held in accounts of programs administered by the federal government, such as the\u00a0Social Security Trust Fund.<\/li>\n<\/ul>\n
In general, government debt increases as a result of government spending, trade deficits, and unpaid credit, and decreases from tax or other receipts.<\/p>\n
PGM CAPITAL ANALYSIS & COMMENTS:<\/h3>\n
About a year ago, when President Trump took office, he pledged to eliminate the national debt “over a period of eight years.” But for the first time in history, the USA national debt surpassed US $21 trillion last week, according to the U.S. Treasury.<\/p>\n
Below chart shows the development of the USA national debt since president Trump took office in January of last year.<\/p>\n
![\"\"](\"http:\/\/www.pgmcapital.com\/wp-content\/uploads\/2018\/03\/total-debt-under-trump-300x157.jpg\")
<\/a><\/p>\nPutting this in context, total USA debt has now risen by over US$1 trillion in Trump’s first year in office.<\/p>\n
The USA Federal borrowing has been on the rise again since February, when Congress passed legislation to suspend the debt ceiling, which allowed the USA government to borrow as much as it needs to fund the activities approved by Congress.<\/p>\n
Under the law passed in February, the USA government will not face any borrowing limit until March 1, 2019. At its current pace, the USA government is on track to add at least US$1 trillion to the national debt by then.<\/p>\n
Outlook:<\/h4>\n
Below chart of the USA Congressional Budget Office (CBO) shows that the USA debt is on an unsustainable path, which if the USA doesn’t take measures to control it, it will reach 150% of GDP by 2047.<\/p>\n
![\"\"](\"http:\/\/www.pgmcapital.com\/wp-content\/uploads\/2018\/03\/chart-300x165.png\")
<\/a>Source: CBO Long Term USA Budget Outlook (March 2017)<\/p><\/div>\n
According with the CBO, the USA federal debt is projected to grow more quickly than the economy and eventually reach levels substantially higher than at any point in the nation\u2019s history.<\/p>\n
If that happens, government borrowing will soak up private savings that would otherwise be invested in increasing worker productivity.<\/p>\n
This process creates a drag on the economy that can lead to lower wages and living standards.<\/p>\n
Below table shows the USA gross federal debt by year for the last decade:<\/p>\n
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