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London’s Financial Times: It’s ‘Right To Sound the Alarm’ over America’s Debt

A congressional report warned about the U.S. debt. Credit: CC/William Warby

A May 7 statement by the Financial Times Editorial Board issued a sharp warning that the U.S. federal debt bubble is heading for a train wreck. Headlined “The long shadows of America’s growing debt,” the editorial warns that “in March, Phillip Swagel, director of the U.S. Congress’s independent fiscal watchdog, told the Financial Times that America risked a Liz Truss-style market attempt to fend off complacency, rather than a warning of imminent implosion"—a reference to the former British prime minister’s ill-fated budget proposal in September 2022 which blew out the British bond markets. “Swagel is right to sound the alarm,” the editorial argued. “America’s debt is on an unsustainable path.”

After reviewing various statistical indicators, FT predictably points the finger at “lax fiscal policy,” i.e., too much government spending. “Lax fiscal policy can raise inflation expectations and the perceived risk of holding debt for long periods,” and American politicians need to wake up. “The country’s global influence may foster a dangerous complacency among its politicians. Ignoring the difficult tax and spending decisions needed to put debt on a more sustainable footing keeps the economy on a risky path amid political and economic uncertainty.”

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