Joe Biden, President, US (File Photo)
America, the richest country in the world, is going through a severe economic crisis. cash crunch in america And his treasury is empty. The biggest crisis facing America is that it needs to take new loans to repay the old loans on time, but the opposition Republican Party is not ready to cooperate. In such a situation, the difficulty in front of the Biden government is that if the loan is not approved, the risk of default will increase.
Actually America’s economy is continuously running in deficit. America’s deficit has increased from $400 million to $3 trillion in the last decade. America’s debt limit is $ 31.4 trillion, while America has taken a loan of $ 30.1 trillion so far. That is, the amount of the existing loan is not far from the limit. By the end of this month, if the approval to increase the loan limit is not received, then from June 1, it can be called default.
Why did this economic crisis come in America?
The story of recession in America starts from the year 2001 itself. In the era of increasing competition of Chinese goods around the world, the economy of America was also badly affected. The consumption of Chinese products started increasing in the market of India, Pakistan, Bangladesh, Sri Lanka or African countries. This also affected American business. This period of recession in America lasted till the year 2008. At that time many countries of the world including India had come under the grip of American recession.
Later in the year 2017, the Trump government made several changes in the financial system to overcome the recession. Cut taxes and limited the resources of revenue. This started affecting the economy a lot. After this, the corona epidemic completed the right unturned. At first, the Trump administration refused to accept Corona, ignored the mask, and by the time it took it seriously, a lot of damage had already been done.
China is taking a pinch of America
In recent times, America has spent money like water in the Russia-Ukraine war, this has also affected the country’s economy a lot. Meanwhile, China is keeping a close watch on America. China took a jibe about Joe Biden’s sudden cancellation of the Quad trip and took a jibe at its current economy.
However, the issue of cash crunch in front of America is not only related to the economy. America has been taking loans from domestic and foreign investors. Taking loans is not a new thing, but the political tussle between Republicans and Democrats is also responsible for this crisis. By not agreeing to increase the debt limit, the Republicans have increased the tension, after which China has got a chance to comment. Although Biden has assured that the situation is under control.
What will be the effect of American crisis on India?
America’s economy is considered to be 23 trillion dollars. Obviously, due to lack of cash and default in America, many developing countries of the world will be greatly affected. First of all, those countries will be directly affected, which America has often helped. Among these, the name of Ukraine can be taken first.
After this those countries will also be affected from where America imports. That is, when America’s economy is in bad shape, there will be a decrease in demand there, due to which exports from many countries like India will decrease. There has been a lot of demand for the Indian software industry in America, but now the recession will affect this industry worse than before.
At present, America needs to increase the loan limit to avoid default, but it is accepted that even if the loan is approved, then the government there will have to make a big change in the interest rate of the banks to bridge the deficit. Due to this, the loan will be expensive and America will come in the grip of economic recession again. Like in the year 2008, in 2023 also it will have a serious impact on all the small and developing countries of the world including India.
Also read: Why America is trapped in economic trap, full detail
