The National Interest bimonthly website published an article on April 11 titled "America's Biggest Enemy Isn't China or Russia, It's Its $35 Trillion Debt," by Brandon Weichert. The article is excerpted below:
After World War I, the United States became a net creditor to the world's other financially depleted powers. Since then, Washington has spent much of its time trying to eliminate the British Empire's once dominant position in the world economy. Later, by isolating and containing the Soviet Union, the United States ensured that it remained economically dominant throughout the 20th century. At the same time, the United States ensured that its currency became the main reserve currency.
In addition, since oil was traded in dollars, the power of the dollar was unrivaled. The Federal Reserve was able to print money whenever it needed to, and it always did, so the U.S. was able to finance itself in ways that no other country in the world could.
All of these factors seem to create a positive feedback loop: as long as the U.S. remains the dominant force in the world economic system, deficits are irrelevant. We can spend as lavishly as we like. Washington can also use its powerful position in the world's financial system to create destructive financial weapons - such as sanctions - that can be used to hurt countries with which it has problems.
Over time, however, the effectiveness of sanctions has been legitimately questioned. Take Russia, for example. After the initial shockwaves of Western sanctions subsided, the Russian economy not only survived, but began to thrive.
Meanwhile, the U.S. economy is experiencing turbulence. Both the Trump and Biden administrations have run the most irresponsible deficits in U.S. history. As a result, inflation and interest rates both soared. The price of everything became unaffordable. The American middle class was in trouble.
Seeing these trends, the rest of the world, especially the Global South, began to think that the US economy could not possibly continue to prosper. Feeling threatened by America's reckless use of its economic clout, Russia and China have begun to turn BRICS into more than just a cool-sounding acronym.Don't doubt the challenges from the developing world. Many countries in the Global South fear that a weaponized dollar could be used against them, so they are looking for hedges.
That's why the U.S. national debt and its runaway deficits matter.
The United States is running a deficit of $1.6 trillion this year, with a total debt of $35 trillion and $1 trillion in interest to be paid. Under these circumstances, if the dollar ceases to be the primary global reserve currency and a real rival suddenly emerges to compete with it, the entire U.S. financial system could collapse. Once the dollar is kicked down the road, printing money and spending its own money to get through each fiscal year becomes impossible over time.
The debt is an impending national security crisis. U.S. Navy Admiral Mike Mullen famously quipped that the national debt is the greatest national security threat facing the United States. He was right.
