How to Tell When a Debt Crisis Is Serious

Today our government spends money like it grows on trees, however the country and its leaders have yet to consider what happens if the tree stops producing or worse it dies. Currently the Unites States national debt has reached $14.2 trillion dollars and drastically increasing by the year. The United States alone is on the path to owing more money than the economy can produce. The government continues to pay only on the interest owed alone, but yet we still find ways to add funding for existing programs and create new ones. Many people believe because of our spending habits America's debt all too soon is going to cause us more disaster than we could ever know.

Currently the United States is only paying the interest on the $14.2 trillion borrowed. The current interest rate on this owed money is low and taking up $210 billion this year, however it won't always be this way and could rise up to twice that to $ 500 billion(Newman 2011). Lenders are always on the look out to make sure their borrowers stay in a margin that would have a low risk of not getting paid back. However, recently PIMCO, the world's largest bonds trader, has reduced its trades of US stock from 12 percent to zero in January of this year. This is the first sign that lenders are starting to view The United States with the possibility of not being able to at least pay the interest on loans already borrowed.

Currently The United States our economy is recovering from the worst recession since The Great Depression. While we have just started our climb out of rescission by slowly bringing down the unemployment rate, however there are still things that could bring us back down. These problems are ranging from rising oil and gas prices to an economic slowdown in China and unresolved debt problems in Europe (Newman 2011). As the country stands today America is riding the fence line of what could possibly happen. As long as nothing was to change and all things go perfect America could climb out of recession and hopefully congress would see the importance of paying more than just the interest