U.s. Government Debt Problem Research

The United States is the biggest empire of debt in the world. It has had a publicdebt since its founding in1791. Depdending on debt economy, US gains economiocdevelopment, and becomes the leader in the world economy. However, the huge scaleof public debt has become a big burden of US economy, and it also brings a lot of riskto the global economy. As the biggest holder of US treasury securities, China shouldrealize the underlying risk, and positively take measures to assert its national interests.The dissertation begins with the history and the current situation of US federaldebt, which demonstrates the crucial role the public debt plays in the US economicdevelopment and the capital accumulation. The next, it analyzes the underlying causesof the huge scale of US federal debt, and the corresponding impact on the USeconomy and the world economy as well. The federal deficit, the supremacy of thedollar, credit rating agancies and the US political situations are the main reasonsattributing to the large scale of federal debt. The world economy has been firmly tiedto US ecomomy through the treasury securities. Once a debt crisis, the globaleconomy will be severely damaged. China has become the biggest creditor nation ofUS government. In the face of the increasing risk of US debt and the downgradingsecurity rating, China should take measures to evade the US debt risks in thefollowing aspects, appropriately reduce the scale of foreign exchange reserves,optimize the reserves structure, increase the right of creditor nation, and accelerate theprocess of RMB internatioanlization.