Long-sown doubts about the scope and sustainability of US borrowing from the rest of the globe resurfaced as Donald Trump celebrated the passing of his Big Beautiful Budget Bill, as it was formally termed, through Congress this week.
It is anticipated that Trump’s tax-cutting budget measure will contribute at least $3 trillion (£2.2 trillion) to the United States’ already staggering debt load of $37 trillion (£27 trillion). The idea is not without its detractors, including Trump’s erstwhile buddy Elon Musk, who has referred to it as a “disgusting abomination Some people question if the rest of the world will lend Uncle Sam as much money as he needs given the mounting debt.
These concerns have lately surfaced in the dollar’s declining value and the increased interest rates that investors are requesting in order to lend money to the United States. This money must be borrowed to cover the annual gap between its income and expenses.
The value of the dollar has decreased by 15% vs the euro and 10% versus the pound since the start of this year. Although borrowing costs in the United States have remained stable overall, the yield curve—the gap between the interest rates paid on longer-term and shorter-term loans—has steepened, raising concerns about the long-term viability of US borrowing.
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