Part 8/10:
The U.S. economy holds a pivotal role in global finance; thus, its struggles could spiral into a worldwide crisis. Investor reactions to rising U.S. interest rates may lead to a ripple effect, forcing other nations to adjust their rates to attract investment, or risk inflation and currency devaluation. Countries like Japan and China, heavily invested in U.S. bonds, stand to lose significantly in the event of an American debt crisis.
Possible Solutions
To navigate out of this precarious situation, the U.S. could explore several approaches:
Fostering Economic Growth: Initiating policies that stimulate growth could curtail debt burdens in an inflated economy.
Prudent Money Printing: While printing money may alleviate immediate issues, it risks hyperinflation.