The economist Alexander Nazarov warned of a decline in the US currency in the future, with the US Congress heading to approve raising the public debt ceiling.
The economist believes that raising the public debt ceiling will prompt the US Federal Reserve to resume printing unsecured money, with the largest US creditors reducing their investments in US Treasury bonds and bills, which will fuel inflation.
“The current US budget deficit is about 8% of GDP. According to the Federal Reserve Bank of New York, the probability of a recession this year is 60%,” the expert explained in a post on his Telegram channel.
He added: “The budget deficit can reach colossal values of between 14% and 20% of GDP. Let me remind you that all US government spending in 2022 was about 25% of GDP.”
Where will the US get the money to cover the deficit?
Nazarov said, “The largest creditors of the United States, China, Japan and many other countries are reducing their investments in US debt. The United States has no other choice but to resume large-scale printing of unsecured money, which will weaken the dollar against other currencies and lead to higher inflation.” “.
He continued, “I think this year in the fall. Maybe the Fed will run the printer sooner if the banking crisis develops faster.”
Yesterday, the House of Representatives in the US Congress approved a Republican bill to raise the public debt ceiling while cutting budget spending.
And the Speaker of the US House of Representatives, Kevin McCarthy, presented a package of measures that include raising the US debt ceiling by $1.5 trillion, in addition to reducing budget expenditures.
This article was originally published by RT.