The United States has crossed a financial milestone that economists have feared for decades. With national debt touching $38 trillion, concerns are growing that the world’s largest economy may be approaching a dangerous economic threshold.
Speaking on the issue, Janet Yellen, the US Treasury Secretary, cautioned that the scale and trajectory of America’s debt could test the limits of fiscal sustainability—not just for the United States, but for the global economy as a whole.
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| US Treasury Secretary Janet Yellen during a congressional hearing, as she warns that America’s $38 trillion national debt could pose serious economic risks. |
A Debt Level Never Seen Before
The US national debt has expanded rapidly over the past two decades, driven by wars, financial crises, pandemic spending, and rising interest costs. While the US has long relied on its strong dollar and investor confidence to manage high borrowing, economists now warn that the current level represents uncharted territory.
Yellen emphasized that the danger lies not only in the size of the debt, but in how expensive it has become to service it. As interest rates remain elevated, the US government is spending hundreds of billions of dollars annually just to pay interest—money that could otherwise fund infrastructure, healthcare, or education.
Why Economists Are Alarmed
Many economists argue that once debt crosses a certain threshold, it begins to slow economic growth, weaken investor confidence, and reduce a government’s ability to respond to future crises. In extreme scenarios, excessive debt can trigger inflationary pressure or force painful spending cuts.
Although the US still benefits from the dollar’s status as the world’s reserve currency, Yellen acknowledged that this advantage should not be taken for granted indefinitely. Global investors, she warned, closely watch Washington’s fiscal discipline.
Global Impact Beyond America
The implications of US debt go far beyond American borders. A loss of confidence in US fiscal stability could disrupt global markets, raise borrowing costs worldwide, and increase volatility in emerging economies that depend on dollar-based trade and finance.
Given the central role of the US economy, economists say that a debt shock in Washington would likely ripple across Europe, Asia, and developing nations.
What Comes Next
Yellen stopped short of predicting an immediate crisis but made it clear that action is needed. Long-term fiscal reforms, balanced budgeting, and responsible policymaking will be critical to prevent the debt from becoming an economic breaking point.
For now, the warning is clear: the $38 trillion debt figure is not just a number—it is a signal that the global economic system may be approaching a red line that policymakers can no longer ignore.
Written by Bharat Modhwadia | Editor, The Gujarat Times
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