Sustainable or Risky? US Economy Balances on Fiscal Spending Edge

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The U.S. narrowly avoids recession through exorbitant fiscal spending, raising questions about the sustainability of such measures. The ideological divide on economic policies, particularly Modern Monetary Theory (MMT), sparks debates on the feasibility of high fiscal deficits, leaving a lingering uncertainty about the future of economic stability.

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China Dumps $491 Billion US Treasuries in a Decade As Country’s US Debt Holdings Hit 14-Year Low

China, the world’s second-largest economy, has been significantly reducing its holdings of U.S. Treasury securities for over a decade. The U.S. Treasury Department reports that China’s holdings have dropped to their lowest in 14 years, decreasing by over $491 billion from a peak of $1.297 trillion in May 2013 to $805.4 billion as of August 2023. This divestment coincides with Moody’s changing the U.S. credit rating outlook from stable to negative, citing America’s deteriorating financial position and political gridlock. While this doesn’t guarantee a credit rating cut, Moody’s indicates an increased likelihood of such a move in the future, especially if effective fiscal measures to manage government spending or increase revenues are not implemented.

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