Is the US on a path toward financial ruin?

US federal debt and budget deficits are at extreme levels, putting America on a path toward financial ruin. Or not. ET Year-end Special Reads Gold outshines D-St with 20% returns, but 2025 may be different The year of the pause: How RBI maneuvered its policy in 2024 2024, the year India defeated China's salami-slicing strategy The government borrowed heavily in recent years to support the economy through the global pandemic and underwrite the agendas of presidents Donald Trump and Joe Biden.

Total debt outstanding has surged to $36 trillion from $19.5 trillion in 2016, or approximately 120% of gross domestic product from 105%. To make matters worse, spending continues to far outstrip tax revenue even though the economy has made a striking recovery from the Covid-19 emergency, causing the budget deficit to balloon to $1.

83 trillion in the fiscal year ended Sept. 30. It’s easy to see why many conclude that America is effectively bankrupt, and the only fix is painful spending cuts that will hurt those most in need.

But, with few exceptions, excessive debt and deficits have always plagued postwar America. When US borrowing topped $1 trillion in the early 1980s, the reaction was similar, with the hawks saying we had mortgaged our children’s futures. And yet, the US economy has gone from strength to strength.

The dollar has become even more entrenched as the world’s primary reserve currency. Demand at Treasury auctions remains as strong as ever. US equities are the envy of th.