Senior fellow at the Peterson Institute for International Economics and former IMF Chief Economist, Olivier Blanchard, is sounding the alarm over the US’s escalating national debt, now surpassing $34 trillion.
Blanchard acknowledges the historically low fiscal cost of debt when interest rates remain below the economic growth rates but expects the US’s situation as uniquely threatening.
The implications of US fiscal challenges could have far-reaching effects on the global economy, he noted.
“I don’t see a big crisis coming, again except for the US where at some point it will happen, whether it’s in five years, 10 years I do not know,” Blanchard stated, bitcoin.com reported.
The economist emphasized that the US is on a precarious path that could lead to a fiscal crisis, exacerbated by recent administrations’ policies contributing to deficit soars and a national debt exceeding 120% of the gross domestic product (GDP).
Meanwhile, Federal Reserve Bank of Atlanta President Raphael Bostic proposes a potential easing of policy rates by summer, the report added.