The current level of alarm over the growing U.S. federal deficit is likely to only become more pronounced in the coming years as debts account for a greater and greater share of the country's gross domestic product.
According to a recent report from the Committee for a Responsible Federal Budget, debt could account for up to 90 percent of the nation's gross domestic product by the end of this decade, and as much as 150 percent by the end of the 2020s.
Current projections cited by the group also suggest that the nation's debts could account for more than 150 percent of the gross domestic product. Even today, the government spends hundreds of billions of dollars each year simply paying interest on the national debt, which is projected to reach $14 trillion in the coming months.
"The large and growing debt puts the United States in a perilous position where if we do not act to change the budgetary course, a fiscal crisis in one form or another will surely ensue," stated the report, which also acknowledged that "it is not at all clear" how an actual U.S. deficit crisis would unfold.
The report also warned that "the longer it takes for us to get our fiscal house in order, the more at risk we are and the tougher adjustment will be in the end."
Another warning about the federal deficit and national debt came this week from former Federal Reserve Chairman Paul Volcker, who was quoted in a Bloomberg News report as saying that "today's concerns may soon become tomorrow's existential crises."
The financial news network also quoted Volcker as saying that ongoing events in European financial markets illustrate the danger of "uncontrolled borrowing" and that his concern about U.S. fiscal issues has remained high over the past five years.
One concern about a rising U.S. deficit is that it could help increase the risk of a credit downgrade, which could result in dramatic increases in borrowing costs and a potentially difficult financial burden to sustain.
Greece, Spain and Portugal all recently had their own credit ratings downgraded by varying degrees, due largely to their respective problems with high sovereign debt. Other countries, including Great Britain, are taking their own steps to lower government spending to keep the deficit under control and credit ratings in place.
Given the widespread uncertainty that surrounds world financial markets at this time, now may be a good time to consult with a silver and gold dealer about investment opportunities.
