The country has consistently been fighting off mounting national debt. With many forecasting a debt crisis in 2030, there have been rumblings about what this could mean for the dominant global reserve currency.
This is especially concerning as the country has yet to navigate through its ongoing interest rate dilemma.
The Federal Reserve appears to be grappling with a struggling balance sheet. As the BRICS alliance works to challenge its position, the US Central Bank has officially surpassed $1 trillion in losses that could impact the fate of the dollar.
According to recent statistics, the Federal Reserve boasted more than $984 billion in unrealized losses at the end of 2023. That has been further impacted by high interest rates.
Whatever plan they have to mend the balance sheet issues are only more convoluted with the Fed not yet cutting interest rates.
That isn’t the only issue affecting the US, as economist EJ Antoni recently shared insight into the impending US debt crisis. He reported that US national debt interest payments will surpass $1.14 trillion this year. That would constitute more than 76% of all collected income tax.
Former Treasury Secretary Steven Mnuchin recently told Bloomberg that a strong dollar is helping in that ongoing debt fight. Specifically, it finances the growing deficit. But he also noted that November’s presidential election must see the beginning of a change.
The increasing and unsustainable debt concerns only depreciate confidence in the US dollar.
Moreover, it creates higher rates of inflation and erosion in the currency. Altogether, the ongoing debt issue only erodes the greenback if left unchecked. Where that becomes an even greater issue is when you factor in the opposition that the dollar is facing.
The BRICS bloc has been the face of de-dollarization for the last two years. It has embraced countermeasures to lessen international reliance on the asset. Moreover, it has sought to institute its currency.
