USA Debt & Deficit Going Out of Control?

[marcus]

From https://finance.yahoo.com/economy/policy/articles/mohamed-el-erian-says-30-160000225.html
Title : Mohamed El-Erian says 30-year Treasury yield at 5.27% signals a structural shift that will make America more expensive
By Eric Esposito , August 2026

... "This is no ordinary bond-market sell-off," El-Erian announced ... The former PIMCO CEO argued that, if selling pressure on bonds continues, "it could mark the beginning of a structural economic shift more enduring and more globally consequential than most previous episodes of market volatility."...

Along with the intense capital demand from AI tech corporations, traditional U.S. bond buyers aren't showing up due to their own internal issues. El-Erian pointed to Japan (the largest foreign holder of American debt) as a prime example ...

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From https://finance.yahoo.com/economy/policy/articles/forget-ai-debt-become-main-192531991.html
Title : Forget AI, debt has become the main character on Wall Street as markets just now decided that it’s gotten out of control after years of warnings
By Jason Ma , August 2026

The enormous mountain of debt (#$40 trillion, having quadrupled since 2008) hanging over the US economy has overshadowed the AI boom as the center of attention on Wall Street.

For years—decades even—the spiraling trajectory of U.S. debt fueled dire warnings, which investors consistently brushed off as low borrowing costs helped turbocharge epic stock gains ...

Debt worries weren't limited to the U.S., with yields in other top economies like the U.K., France, Germany, and Japan also surging... See https://www.expatindo.org/community/threads/soaring-debt-in-many-big-economies.8375/

"Given that public debt is already so high for many countries, it's only been a matter of time until markets run out of patience," ... "It looks like that's happening now."

Yields (in US) went up so quickly that the Treasury Department suddenly announced it will increase buybacks ... The move briefly lowered yields, but they went back up again ...

bond investors are demanding greater compensation for fiscal, geopolitical and policy uncertainty, describing it as a shift that will prove persistent.

While the pace of the bond selloff isn't justified by recent events, the market's concerns are rational as governments show little indication of curbing deficits (#about 6% of GDP in US, a historically high ... rarely seen outside of wartime or deep recessions) ...

# from https://finance.yahoo.com/economy/policy/articles/bond-market-sending-distress-signal-190122262.html

 

[Balifrog]

Just roll it over.
Forever....

In France the cost (interest only) of the debt is equivalent to the national education budget....

 

[marcus]

Just roll it over.
Forever....

If there are buyers .

As per Harryopal1 post no.6 @ https://www.expatindo.org/community/threads/soaring-debt-in-many-big-economies.8375/, US debt is owned mostly by domestic investors + ~20–25 % by foreign countries (Japan, China, others) . Countries are decreasing or will decrease buying American bonds and so (I believe) will Americans do so too , unless the bond's yields increase significantly .

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a) Historically, the U.S. stock market delivers roughly 10% annually for the S&P 500 than U.S. government bonds, from 2% to 5% (Google AI) ;

b) We humans are naturally impatient , we want to retire as soon as possible , so I guess most will prefer choosing the riskier 10% than the safer 5% ;

c) For individual personal investing, Warren Buffett famously recommends a 90/10 rule: put 90% of money in a low-cost S&P 500 index fund and 10% in short-term government bonds (Google AI) .
Note : Warren Buffett is a famous American investor (known for "value investing") and became, one of the richest people in the world - he saved the equivalent of $53,000 by age 16 and hit a net worth of $1 million when he was 32. (Wikipedia) . He now has over $140 billion . From https://www.investopedia.com/articles/financial-theory/08/buffetts-road-to-riches.asp .