America is on 🚨 RED ALERT for its DEBT BOMB of $36 TRILLION! India is in DANGER again? : Case study

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VIDEO INTRODUCTION:

You know, America has built a lot of bombs—nuclear bombs, hydrogen bombs, neutron bombs. And this time, they made a bomb that costs 36 trillion dollars! This bomb is called the debt bomb!

And as Donald Trump would like it, it’s made in America. But the problem is that it’s not making America great again!

You know how much 36 trillion dollars is? It’s more than the GDP of China, Japan, India, the UK, and Germany combined! This debt bomb is so dangerous that the IMF has already warned the US. The credit rating companies have already started screaming danger. And now, the world is at the edge, hoping that America doesn’t give us the third season of the Great Depression!

Look at this—America’s debt has already crossed 120% of its GDP. And it’s so bad that it’s even worse than World War 2 levels!

So, what is wrong with the American debt bomb?
How on earth did the richest country on Earth come to the brink of collapse, even without war? Why is the world panicking this time?
And most importantly, how will it affect India?
.

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✅Study Materials:

6-Month Check-Up on FY 2025 Budget Vital Signs

https://www.defense.gov/News/Releases/Release/Article/3703410/department-of-defense-releases-the-presidents-fiscal-year-2025-defense-budget/

https://www.census.gov/library/stories/2024/06/metro-areas-population-age.html

Tax Policies Have Increased Inequality, and So Would Entitlement Cuts

https://www.statista.com/statistics/219846/us-income-distribution-of-individual-earnings-by-gini-coefficient/

https://www.ndtv.com/world-news/moodys-cuts-us-credit-rating-aaa-fitch-s-p-cut-ratings-impact-on-economy-donald-trumps-one-big-beautiful-bill-8487228#:~:text=Moody’s%2C%20which%20had%20retained%20the,nine%20per%20cent%20by%202035.

https://m.economictimes.com/news/international/us/is-it-a-ticking-time-bomb-ray-dalio-says-skyrocketing-u-s-debt-could-cripple-the-economy-and-threaten-markets-and-the-dollar/articleshow/118631681.cms

https://www.voronoiapp.com/economy/Which-Countries-Hold-the-Most-US-Debt-58

https://m.economictimes.com/markets/stocks/news/ray-dalio-who-warned-of-2008-market-crash-says-u-s-treasury-risk-greater-than-what-moodys-downgrade-suggests/articleshow/121291585.cms#:~:text=Ray%20Dalio%20warned%20that%20the,which%20erodes%20bondholders’%20real%20returns.

https://www.newindianexpress.com/business/2024/Aug/20/at-242-billion-india-12th-largest-holder-of-us-treasuries-in-june#:~:text=As%20per%20the%20data%2C%20India’s,from%20%24240.6%20billion%20in%20March.

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America deserves to hear the truth. Our national debt is too high. 36 36 36 trillion. That’s the debt. 36 trillion. 120% of GDP and rising debt service costs. The International Monetary Fund has officially raised the red flag. You know, America has made a lot of bombs. nuclear bombs, hydrogen bombs, even neutron bombs. But this time they made a bomb that costs $36 trillion. And this bomb is called the dead bomb. 36 trillion. It’s a ticking time bomb. And according to the IMF, it is ticking louder than ever. The International Monetary Fund, it has issued a direct warning. Without exaggeration, American debt is a ticking time bomb. $25 trillion of new debt on top of the $36.2 $2 trillion we have now, which is already the most debt of any country in the world. That will detonate unless we take serious, responsible action. And as Donald Trump would like it, it’s made in America. But the problem is that it’s not making America great again. You know how much $36 trillion is? It’s more than the GDP of China, Japan, India, UK, and Germany combined. This debt bomb is so dangerous that IMF has already won the US. The credit rating companies have already started screaming danger and now the world is at the edge hoping that America doesn’t give us the third season of the great recession. Treasury Secretary Janet Yellen warning how little time is left for lawmakers to raise the debt limit. Astronomical amount of tax that the government is getting from we the people. We are at the beginning of a very classic late cycle late big cycle debt crisis. Didn’t expect that reaction, but that’s okay. Look at this. America’s debt has already crossed 120% of its GDP, and it is so bad that it is even worse than World War II levels. And this is the reason why the world is scared. So the question is, what exactly is wrong with the American dead bomb? How on earth did the richest country on earth come to the brink of collapse even without war? Why is the world panicking this time? And most importantly, how will it affect India? To understand the American economic crisis, you need to understand the four brutal truths of the American economy. The first truth is that the US doesn’t just have a spending problem, it has a Gen Z spending problem. Just like the Gen Z’s make 3,000 rupees a month, but still want a 20,000 rupee Jordan on EMI. America wants a trillion dollars extra every year just to bomb countries. America wants a trillion dollars extra to protect world peace. You see, in a healthy economy, governments would spend when the economy grows and they would cut spending during bad times. But the US, the United States runs on deficits every single year, whether the times are good or bad. Look at this chart. America’s defense spending, social security, Medicare, interest payments, and mandatory programs make up 70% of the federal budget. In fact, America spends more on defense than the next 10 countries combined. They spend $800 billion a year. Sounds powerful, right? But somehow they still lost to a bunch of dudes in chuples and Toyotaas in Afghanistan, guys. And the worst part is that they say we do this to spread democracy. And somehow they couldn’t spread Wi-Fi in Kabul. Now, that’s not foreign policy. That is a bad group project. On top of this, because the US has an aging population, their spending is increasing even further. Add this up with COVID stimulus, military aid, and infrastructure programs, and you will see that America spends far more than it earns. Secondly, America has a tax problem. Look at this chart. America has been cutting a lot of taxes. But the problem is that while the poorest 20% as in the lowincome or unemployed people only got 3% of the total tax cuts, the second poorest 20% got 7% tax cuts. But as the people got richer and richer, their tax cuts only kept increasing. In fact, the richest 20% received 65% of all tax cuts, which is more than all other groups combined. So long story short, federal tax cuts over these years have disproportionately favored the wealthiest Americans instead of empowering the poor. Now the question over here is why did this happen? Well, this happened because of something called trickle down economics theory which is something that Ronald Reagan proposed for America back then. He thought that if the rich people and big businesses are taxed less, they will consume more, they will employ more people, they will increase wages and eventually the money will slowly trickle down to the poor people. But the problem with this thesis is that these tax cuts only made the rich richer and the poor poorer. When you put a big tax on something, the people will produce less of it. So we cut the people’s tax rates and the people produced more than ever before. The economy bloomed like a plant. And thus was born a new economic philosophy. Reganomics. Cutting government spending, cutting regulation, and cutting taxes. Cutting taxes especially for the richest Americans. the tax cut cut bill. This tax cut really was targeted at the richest of the rich people in the United States. This whole thing feels a bit like a scam. We unfortunately in the United States are at the very high end in terms of income inequality. $465 billion dollar. That’s how much richer Elon Musk, Jeff Bezos, and the world’s richest men got in the last four years, according to a new report from the UK-based charity organization Oxfam. That amounts to $14 million per hour. Oxfam says on the other hand, nearly 5 billion people are poor. Look at this chart. This chart shows the income inequality in America and it is measured using something called Genie coefficient. If this coefficient is one, it means the country is perfectly inequal, which means it’s terrible. If it is zero, it means that the incomes are perfectly equal, which means the society is perfect. And here you will see that from 1990 to 2023, the inequality in US has been consistently increasing. And look at this graph. Over time, the government spending has been going up so fast that its tax revenue is failing to catch up. This means the government is spending more than it earns. And the scary fact is that this gap is getting bigger and bigger. And to cover up this gap, what does the government do? The government has to borrow more and more money. This is the second problem with America, which is tax cuts not leading to the empowerment of poor people. And because of these two problems, America gets a third problem as a bonus, which is the interest problem. You will be shocked to know that America nearly spends $1 trillion a year just on interest payments. So America pays more in interest than the GDP of 174 countries. And this is where the debt bomb gets bigger and bigger as the government runs on deficit. If you think about it, as the government runs on deficit, what happens? It issues bonds. And when they issue bonds, the government will have to pay more interest. This interest payment plus more spending leads to more deficit. So what does the government do? they borrow again and eventually the deficit widens. This has been repeating for the past 20 years to turn America into a ticking debt bomb. And now the US national debt has crossed $36 trillion. And like I said, that’s more than the GDP of China, Germany, UK, Japan, and India combined. In fact, the funny thing is that Congress actually sets something called a debt ceiling where the government decides that legally they cannot create more debt after this limit is set. But funnily or stupidly or dangerously, whatever this thing is, the US government has crossed and extended its debt ceiling more than 70 times since 1960. Yes, 70 times. So, the debt ceiling is practically a joke. And now the debt of US stands at 122.5% of its GDP with projections indicating that it could exceed 140% by 2032 if current policies persist. Now the question over here is when the US debt ceiling has increased more than 70 times. What exactly is the big deal with that? They can increase it again right then why is IMF warning? Why is Moody’s downgrading US bonds? And why is there a panic in the market? Well, as it turns out, this time there is something very scary according to the economists. In fact, billionaires like Ray Dalio, they’ve consistently said that US debt is a ticking financial bomb. And he warns of an economic heart attack. And we now have a debt issue, a big debt issue globally that is very important. That’s a force, that financial force. And over the next year, we’re going to have over $9 trillion of debt that we have to pay back and roll forward. Hopefully, right now, the United States is approaching what I would call a financial red zone. And if we don’t act fast, if leadership doesn’t recognize the trajectory, we won’t just face a downturn, we’ll face a fullblown economic heart attack. And let me explain why. Here’s what economists fear. They fear that whenever the US needs more money, what does the government do? The government issues treasury bonds. For example, the US might tell the world that they need $1 trillion. So they would issue $1 trillion bonds with a promise to pay 2% interest. So China might buy $300 billion worth of bonds. Japan might buy $200 billion worth of bonds. And UAE Qatar and the rest would buy $500 billion worth of bonds. And why do they buy these bonds? Because US dollar bonds are the safest assets to keep in the world. Anything will fail but the US dollar bond. But look at this guys, there is something strange over here. In 2012, China held $1.3 trillion in US Treasury bonds, but now they only hold $759 billion. Similarly, Japan used to hold $1.84 trillion, but now they only hold $1.06 trillion worth of bonds. So even though the UK’s bond holdings are increasing, the others are actually plateauing. In fact, the US Treasury bond yields have shot up in the past 10 years to an alarming level. And this indicates decrease in the demand for US bonds. Federal Reserve will ease the pace of interest rate cuts next year. The US 10ear Treasury bond deal has continued to rise. The US 10ear Treasury bond deal rose 7.6 basis points from the previous trading session. The public debt has risen past $ 32.3 trillion this year and it’s nearly 120% of total gross domestic product with the escalating budget deficit creating a greater supply of bonds. more than demand can meet demand from global central banks particularly Japan and China are huge buyers of US debt they have pulled back particularly China has pulled back quite a bit their holdings are now less than $1 trillion which is the first time that’s happened and exactly when the demand for US bonds is falling America’s debt problem is about to get worse and it’s all linked to Donald Trump’s latest move which is called the one big beautiful bill sounds catchy right well ironically ly for America’s debt. It is anything but beautiful. This bill will make Donald Trump’s 2017 tax cuts permanent. It ramps up military spending and slashes budgets on healthcare and welfare programs. And just look at this chart. Like the previous tax cuts, it overwhelmingly benefits the richest Americans. And what’s even worse is that according to this chart, it adds anywhere between 3.3 to 5.2 2 trillion to US debt which is practically equivalent to the entire GDP of India and Germany. And if this happens, the annual budget deficits would explode to 2.9 to $3.3 trillion. And the interest alone would sore to nearly $1.8 trillion a year. And this pushes America’s debt even further to 125% to 129% of his GDP. So instead of fixing the debt crisis, this beautiful bill literally throws petrol on an already raging debt fire. This is the reason why the credit rating companies have already started downgrading US bonds. And when ratings drop, what happens? Investors panic. They demand higher returns. So the interest rates go up again. And when the interest rates go up, America gets another step closer to collapse. And this is where the economists fear that US will enter a debt spiral which says that if the demand for bonds is less then US will have to increase interest. If they increase interest, debt will get costlier. If debt gets costlier, America will have to borrow more money to pay interest and eventually the interest rates will rise again. Eventually economists fear that the US will enter a point where the debt bomb will explode and the US economy will collapse. This is what Ray Dalio Fur will spiral into an economic heart attack. And mind you guys, Ray Dalio has been warning everyone for 16 years now. So the question is if Ray Dalio’s predictions come true, what will happen to India? Well, if the US enters recession, firstly we can expect a stock market bloodbath. Like we saw in our previous case studies, the Nifty, Sensex and the entire Indian market, it is heavily powered by foreign institutional investors. We’re talking about billions of dollars flowing into Indian stocks like Infosys, Reliance and others. So when the US hits a debt ceiling and the Wall Street panics, standard observations say that foreign institutional investors will pull their money out of India and they will invest it in US Treasury bonds. Why? Because these bonds offer higher interest rates and I just showed you that in the graph. And even during recession, it is always better to be in the US than in a developing market like India. It’s ironical but that is true. In fact, this is exactly what happened in 2011. And you’ll be shocked to know that the Indian markets crashed nearly 10% in a matter of months. For the first time in history, our country’s AAA credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet. Stock prices fell this morning in markets around the world in reaction to the US debt crisis. Both European and Asian markets as a whole were down. $14.3 trillion, an almost unfathomable amount of debt. This is the biggest economy in the world with the biggest debt that the world has ever seen. There’s a virtual bloodbath of Dal Street sensitive index has plunged by more than 900 points. So the Sensex has breached its 8,000 mark. Nearly 6% off on the Sensex clearly reflected what’s happening around the world. So even if our companies are rock solid, this kind of global panic crashes everything. Not because of India’s weakness, but because of the panic and the strength of the dollar. And during these times of turmoil, what can you do to protect your portfolio? Well, like I’ve always said, keep a certain part of your investment only in debt or bonds. And if you want repercussion of US going into recession. Secondly, we can expect a rupee chaos. You see, when America’s economy goes into a crisis mode, the dollar starts swinging and the rupee always gets dragged into a dance. Initially, it always looks like the dollar is weakening. But as the crisis drags on, the investors start dumping Indian assets and the rupee starts tanking. And here’s something that most people miss. India’s forex reserves includes over $237 billion in US government bonds. If these bonds lose value, RBI’s ability to protect the rupee shrinks. In fact, every time the dollar shakes, the rupee has weakened and inflation has hit India. Look at 2011 when the US credit ratings were downgraded, the Indian markets dropped, the rupee stumbled and as the world panicked, India took a hit. And today, the US debt has crossed a terrifying $ 36 trillion. That’s over 122% of America’s GDP. And just like 2011, in 2025, Moody’s has issued another downgrade. So all we can hope for is that history doesn’t repeat itself. Now if you ask me what will happen, my limited knowledge says that America will use something called quantitative easing to get out of trouble. And if you don’t know what is quantitive easing, please type QE in the comments and I’ll make another detailed case study on the same. But the one thing that is certain is that if America doesn’t learn to manage its cash properly, then today, tomorrow, 10 years later, or 20 years later, one fine day, America will collapse. And when it does, it will drag the entire world into another version of Great Depression. So, all we can hope for is that it doesn’t happen in our lifetime, at least not in 2025. That’s all from my side for today, guys. If you learned something valuable,