It seems that the endless story of ever-increasing US public debt will never come to an end. The Congressional Budget Office (CBO) released a report showing that the country's national debt will double by 2050. Nowadays, debt in the United States has almost hit 100% of GDP, or to be precise, 98%. Next year, the reading is expected to reach or exceed 100% of US gross domestic product. Interestingly, federal debt peaked at 106% of GDP at the end of World War II in 1946. That was the highest level of government debt in the nation's history. However, the Congressional Budget Office suggests that public debt will set a new all-time record in 2022, increasing to 107%. A severe economic crisis caused by the coronavirus pandemic is a fertile soil for sustainable debt growth, while the current monetary policy is an excellent fertilizer that can only boost the process. Experts warn that even a total victory over the coronavirus will not improve the situation and a sharp increase in interest rates will only frighten investors and slow down the economy. As a result, Europe may step into the spotlight. Berenberg Bank Chief Economist Holger Schmieding believes that Europe’s lower budget spending is likely to become a strategic victory for the euro area. The US authorities are spending so much that it is scaring investors. What it means is that European bonds will become more attractive than their US counterparts.
