When Will the Federal Debt Cause a Greece-Like Crisis in the U.S.?


Business & Money

Question: Given how fast the federal debt is growing relative to GDP, how long before the U.S. is forced into austerity measures by foreign creditors, as we see happening in Greece?

Answer: You can hardly turn on the television these days without hearing a politician or pundit warning the American public that we’ll “end up like Greece” if the federal government doesn’t get its fiscal house in order soon. And it’s true that we don’t want to end up like Greece: The  global financial crisis caused its already-problematic debt to soar; financial markets began demanding higher and higher interest rates to fund that debt; which in turn undermined the economy further, again causing deficits to rise.

But let’s take a step back and recognize that, for several reasons, the U.S. is in a dramatically different economic position than Greece.

Perhaps the most important difference between the two countries is that…

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