Growing public debt as the main factor in the expected global recession

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Ivane Javakhishvili Tbilisi State University Press
The article discusses the dynamics of the budget deficit and public debt of the US federal government and the factors influencing them. It is shown that the growing problem of the sovereign debt of industrialized countries poses a threat not only to these countries, but also to global economic stability and security. Based on data from the US Treasury, the article analyzes the reasons for the decline in the interest of foreign financial investors in US treasury securities. According to the US Department of the Treasury, which refers to the end of October 2022, foreign holders of US Treasury securities accounted for $7.19 trillion, and the central banks of other countries - $3.65 trillion, that is, about half. It is worth noting that from October 2021 to October 2022, the amount of US debt held by foreigners decreased by 6 percent, or $459 billion. On an annualized basis, such a large-scale reduction in the foreign portfolio of US securities has not been observed before. This decrease occurred against the backdrop of an increase in the key rate of the US Federal Reserve starting from March 2022, which also meant an increase in interest rates on US Treasury securities. In the spring of last year, it was assumed that due to the increase in the yield of US financial instruments, there would be an additional influx of foreign capital into America, but US Treasury securities failed to become attractive to foreign financial investors.
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Conference Proceedings: "The World Economy in the Post-Pandemic Period: Implications and Challenges", Tbilisi, 2023, pp. 294-302