beeflightningmegaways| Two top economists surprisingly predicted that the next recession could detonate the U.S. debt bomb!

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The chief economist of JPMorgan Chase and Apollo Global Management saidBeeflightningmegawaysThe US debt crisis could have further repercussions on global financial markets.

Foreign media pointed out that as the US Congress prepares to debate whether to extend Trump's tax cuts in 2017, the unsustainability of the US fiscal position has become increasingly prominent.

According to the Congressional Budget Office, the ratio of federal debt to the size of the US economy is expected to reach an all-time high of 116 per cent by 2034, surpassing its level during World War II and expected to reach 172 per cent of GDP by 2054.

Torsten Slok, chief economist of Apollo Global Management (Apollo Global Management) and Michael Feroli, chief economist of JPMorgan Chase, said that the ability of the market to absorb newly issued US Treasuries is still an open question.

The two Wall Street economists pointed out at a seminar on the US fiscal situation held by the American Enterprise Institute (American Enterprise Institute) on Monday that another recession in the United States would increase the deficit and debt more than expected, which could be the catalyst for triggering the US debt crisis, which could send shockwaves through global financial markets.

Feroli noted that as post-financial crisis regulation limits the ability of big banks to hold US government debt on their balance sheets, the Treasury market will be unstable in the event of an unexpected surge in debt issuance caused by the recession.

Feroli points to concerns that "not only does the Treasury have to increase issuance in a recession, but also whether there is an infrastructure that can mediate such issuance to ensure that we don't have some problems, perhaps as triggered by Leeds Truss's mini budget two years ago." He was referring to the bond market turmoil caused by the UK government's plan to implement unfunded tax cuts.

Apollo's Slok points to changes in the composition of Treasury bond buyers as another potential concern as pension funds and insurers begin to absorb newly issued Treasuries and investors are attracted by high interest rates. These buyers replaced foreign governments, which bought large amounts of Treasuries to strengthen the dollar and support exports to the United States, Slok said.

"our Treasury buyers are moving from being insensitive to yields to being sensitive," Slok added, adding that demand for Treasuries could fall rapidly if the Fed cuts interest rates in a recession.

"if your debt levels are rising and you have a sizeable deficit, you are more vulnerable to shocks than normal," Slok said.