Now USA’s debt is over US$14.5 trillion. Because of which S&P was decreased its repayment worth from AAA to AA+. Still it is highly affecting global markets. We will analyse about reasons for US debt and how USA tries to overcome from this problem.
Why did USA get more debt from various resources?
Federal Reserve Bank is playing as central bank of USA like our RBI. Federal Reserve Bank was planned to issue Treasury bills, Notes and Bonds to public and other countries in 2008 and 2009 to solve the problem of Global crisis when value of US Dollar was so high when compared to other currencies in order to get more money.
1. Tax level in USA was low when compare it to other developed nations in 2008-2009
2. Normally US people would like have luxury life so they were ready to give more money to buy the products and services. So their savings level became down
3. Govt itself cut tax and increased its spending on people.
4. Also USA had debt about US&6-7 trillion before economic crisis so it wanted to pay high interest for that debt.
What are the steps have been taken by US govt to overcome this problem?
1. It has reduced interest rates in order to get high investments.
2. It has planned to reduce its expenses US$1 trillion in next 10 years.
3. It is planning to increase taxes on all segment
