F.M. Shakil
Source: Al Mayadeen English
Last year, US Treasury Secretary Janet Yellen stated that failure to extend the US debt ceiling could have disastrous repercussions.
The US's involvement in various global disputes with the aim of not resolving any, and thus getting its adversaries entangled in a prolonged and endless quagmire has had a notable effect on its economy. Due to resource constraints, the social sector often struggles to provide for the welfare of underprivileged populations and fails.
The self-proclaimed superpower has spent tons of taxpayers' money on military endeavors in different regions of the globe, including Europe, Latin America, the Middle East, Asia, the Balkans, and Africa.
US administration feels the heat
There seems to be a consensus in the US official quarter that if this situation persists any longer and the debt-to-GDP ratio remains at 100%, it could have negative consequences for the country's financial stability, investor confidence, and dollar valuation, resulting in a chronic recession.
The House Committee on Financial Services echoed these concerns when US Treasury Secretary Janet Yellen briefed the House Committee early this month on the country's overborrowing and inflation issues.
She voiced concerns about the global trend of ditching the dollar in cross-border trade and warned that an impending economic collapse was brewing. Janet stated that the impact of Bitcoin and other cryptocurrencies, as well as the geopolitical narrative of de-dollarization, had a combined disruptive effect on the US debt burden.
Leading US banks, such as JPMorgan Chase, Wells Fargo, and Citi, have also expressed similar concerns about the dire state of the US banking industry, citing a major economic vulnerability characterized by a dramatic drop in deposits and an increase in loan risks.
Recent earnings results from these banks reveal an alarming reality: consumers are struggling due to persistent inflation and rising debt, which has forced banks to raise interest rates on savings accounts to draw in deposits. The results are evident: the lending market is unstable, earnings are decreasing, and charge-offs are rising sharply, all of which point to an impending financial disaster. The instability of the banking sector significantly impacts the overall economy.
Tesla's CEO, Elon Musk, questioned the viability of the US dollar in a string of tweets in March of this year, holding US officials responsible for mismanaging the nation's finances and economy. He said that overspending, exceeding credit limits, growing debt, and excessive currency printing will drive the country into deep economic turmoil.
The billionaire entrepreneur stated that the economic sanctions imposed by the United States on other countries are motivating them to break free from America's diktats by refusing to use the US dollar.
Debt Ceiling
Last year, US Treasury Secretary Janet Yellen stated that failure to extend the US debt ceiling could have disastrous repercussions. She cautioned that debt-ceiling talks shouldn't happen "with a gun to the head of the American people." In an interview with ABC News, she warned that without a borrowing increase, the federal government may run out of money, unable to pay benefits, wages, and other expenses.
"This is Congress' responsibility, and unless they fulfill their obligation, we will continue to face the risk of an impending financial and economic disaster," she added. Biden, Janet said, is too busy in his negotiations with Republican leaders to get the existing $31.4 trillion debt ceiling enhanced to an appropriate level.
The debt ceiling is a limit that Congress puts on the total amount of debt the federal government incurs to offset its expanding expenditures and prevent defaulting on its obligations. The government, after reaching that limit, cannot borrow further funds unless Congress raises the ceiling. Over the years, the US administration has raised the debt ceiling multiple times. Changes to the borrowing limit are occasionally contentious and are frequently associated with broader discussions regarding fiscal policy, government expenditures, and other legislative objectives. For instance, between 2021 and early 2023, Congress, after much deliberation, finally reached a consensus on the debt ceiling.
US perpetuates global volatility
Each year, the US provides huge financial aid to various countries having friendly relations with the US and its allies, but none of these funds have ever gone to the real stakeholders and always went to non-state actors, serving its security, economic, and geopolitical interests.
The US, for example, allocated a staggering $175 billion to Ukraine. Besides supplying military equipment, Washington disbursed a sum of $107 billion to the Ukrainian government, and the remaining funds of $68 billion supported a variety of activities related to the war in Ukraine. Sadly, not a penny of this massive fund went to poor Ukrainians who desperately needed support to provide everyday necessities for their families, suffering an unending war hysteria.
In Afghanistan, the US just threw out over $2.3 trillion in human and budgetary costs from 2001–2022, which includes operations in both Afghanistan and Pakistan.
Similarly, Israel, which has been carrying out massacres in Palestine in violation of the United Nations Charter, has consistently received huge military and financial assistance from the US since its establishment. Even though Israel disregarded international laws and human rights, committed war crimes, and killed over 38,000 Palestinians in Gaza, Washington remains unconcerned about Israel's use of its funds for ethnic cleansing and atrocities against Palestinians. Over the years, the total economic and military assistance to Israel has amounted to approximately $310 billion.
Likewise, the US has spent over a billion dollars since 2017 just to ward off Russian influence in Eastern Europe and the Balkans. The Inspectorate of the US State Department published a report in 2022 revealing that the US expended the sums on its "Countering Russian Influence Fund" (CRIF).
According to the report, the US spent money on "civil society organizations and other entities for rule of law, media, cyber, and other programs that strengthen democratic institutions and processes and counter Russian influence and "aggression." From 2017 to 2021, Washington spent the majority of that sum, $621,555,857 million, in Central Eastern Europe, the Balkans, and the Visegrad Group (V4).
V4 is an informal regional format of cooperation between the four Central European countries: Poland, the Czech Republic, Slovakia, and Hungary. Proxy Warfare In 2022,
Proxy warfare
Lawfare, a non-profit multimedia publication focused on "Hard National Security Choices," published a report that sheds light on the role of sponsored proxy groups in global conflicts. The US, France, and the United Kingdom, three major weapon supply countries, have been involved in backing numerous armed groups, both state and non-state, in ongoing or recent conflicts. Consequently, there has been a significant rise in the number of armed groups over the past six years, surpassing the increase seen in the previous six decades.
Studies indicate that external actors' involvement in internal armed struggles tends to prolong these conflicts. Proxy warfare also impacts the nature of conflicts and increases the risk of atrocities, brutality, and other harm to civilians. Armed groups that have access to external resources, whether from outside backers or the exploitation of natural resources, are less dependent on the support of local populations. This autarky makes them prone to committing atrocities. The proxy warfare funding has had a detrimental impact on the social and public sectors of the country. The budget deficit and proxy funding leave virtually nothing to fulfill the demands of public sector programs.
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