U.S. Net Debt Increases 14% To Record-Level $2.69 Trillion

Professor Andrew Bernard via The Wall Street Journal about the U.S. net debt increase and its consequences for the country.

Problems arise if growth in the U.S. slows relative to other countries and foreigners then look elsewhere for returns. "The way to think of that is if your income growth slows down, the creditors are going to stop lending to you and demand repayment," said Andrew Bernard, professor of international economics at the Tuck School of Business at Dartmouth College.

If that happens, the worst-case scenario is that interest rates will surge in the U.S., the dollar will weaken and the economy will contract. "The key for the United States is if our [economic] growth rate and productivity growth rate slow down, we'll have large repayment obligations," Prof. Bernard said.

Source: The Wall Street Journal by Michael M. Phillips June 30