Why has the United States been contracting recently?
Is the American empire betting everything?
The U.S. is burdened with massive debt and deeply mired in public opinion infighting. They are betting that internal and external disconnection and contraction policies can delay the fiscal crisis and stop the tearing.

The U.S. government has long been in deep debt. National debt and fiscal deficits continue to rise.

Why borrow money?

This is because government spending far exceeds tax revenue, especially the enormous expenditures on military, social security, healthcare, and infrastructure, coupled with the increased fiscal deficit due to economic stimulus plans and the pandemic in recent years, which has led to a continuous rise in U.S. national debt.

The borrowers include both domestic investors and foreign governments and institutions.

Domestically, they include various financial institutions, pension funds, insurance companies, banks, individual investors, and various investment funds. They buy national debt mainly to obtain low-risk, stable returns.

Foreign investors are mainly central banks and sovereign wealth funds of various countries, with China and Japan historically being significant holders of U.S. national debt.

This debt must be repaid; the consequences of not repaying are severe.

Firstly, U.S. national debt is the cornerstone of the global financial market. The financial systems of many countries, central bank foreign exchange reserves, and various investment products use U.S. national debt as a pricing benchmark and safe asset.

If the U.S. defaults, global investor confidence will be severely damaged, potentially triggering a collapse of capital markets worldwide.

A default would cause the U.S. to lose its credibility in international financial markets, borrowing costs would rise sharply, and the difficulty of future government financing would significantly increase, potentially leading to a vicious cycle of debt until bankruptcy.

At the same time, various public services and social security programs, such as healthcare and pensions, would be forced to be significantly reduced, investors would face enormous losses, and banks, stock markets, and credit markets would plunge, severely impacting consumer confidence and corporate investment willingness, leading to economic recession or even depression.

Moreover, a U.S. default would significantly weaken its voice and leadership in international affairs.

Therefore, interest must be paid each year, and upon maturity, the principal must also be repaid.

As the debt scale becomes larger, interest and principal payments will increase rapidly, and eventually, it may require 20% or more of fiscal revenue to pay interest.

Faced with massive debt pressure, the Trump administration had no choice but to consider 'contraction inward.'