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Most individuals have loans, but governments also face significant debt burdens. The current economic climate has caused interest rates on government bonds to rise across many countries. These government bonds are a type of loan issued by governments to raise funds, which investors can purchase. Interest rates on long-term government bonds, such as those with a 30-year maturity, are now higher than they have been in decades.

Similarly, short-term interest rates have also reached their highest levels in years. While this may not sound as sensational as stock market news, the state of the debt market is a pressing concern. Credit is crucial for understanding the financial health of businesses, homeowners, and nations. Government debt rates serve as a benchmark and reference point for numerous loans and investments.

At the same time, they act as a global trust indicator. As investors become increasingly uncertain about inflation, budget deficits, and government debt levels, they are willing to pay more to borrow money over 10 or 30 years. Many countries have unsustainable debt levels. In many national budgets, interest payments are consuming an uncomfortable portion of the budget, even more than defense spending.

At the same time, budget surpluses are about as modern as fax machines. Or like an exotic relic only accessible to oil-rich countries like Norway. Political leaders change as often as people change their running shoes. The primary reason is that political economic maneuvering has shrunk dramatically. Countries are so deeply in debt that the opportunity for policy flexibility has been largely eliminated.

There is minimal room for investment in early childhood education or tax cuts. Meanwhile, we have the world's superpower, Donald Trump's United States, having passed a new, aggressive fiscal milestone this summer. Government debt has ballooned to 40 trillion dollars, making it more than 17 times the size of Norway's largest oil fund.

This news has received little political outcry. The U.S. Treasury is attempting to mitigate the situation by buying long-term debt to keep interest rates low. However, this is only a temporary fix. The amounts involved are still dwarfed by the vastness of the market. The U.S. is running massive budget deficits, causing debt levels to soar by the equivalent of a Norwegian oil fund annually.

Few voters seem genuinely interested in cutting spending. Some countries must simultaneously borrow money to support the U.S., Japan, and France. For global governments, they are not the only ones with the highest debt levels. The race for artificial intelligence investments has driven one of history's largest investment projects.

Data centers, power, chips, and infrastructure financing are all financed through massive loans. Therefore, a fascinating competition emerges. Pension funds, banks, and savers must decide where to invest their money. Naturally, this does not mean that government bonds and corporate bonds are the same. Government bonds are considered the safest investments, paying higher interest rates than corporate bonds.

The growing government debt may not necessarily trigger a financial catastrophe. This could take many years to reach a critical point. As long as interest payments are manageable, the debt mountain can persist for many years. Corporate giants are more exposed. Investors have priced in the expectation that artificial intelligence will revolutionize the world in the long run.

However, if many AI players do not quickly generate more profits, debt burdens will attract more attention. We could see an increase or decrease in debt and stock levels. Many investors are already aware of this. To obtain the necessary loans, tech giants often offer higher interest rates than governments. For as long as the debt balloon does not burst, this situation may continue.

It could either be more favorable or less favorable for investors. However, the supply of funds is not endless. Increased competition for borrowing could lead to higher long-term interest rates for most. This could create a vicious cycle. High debt levels lead to higher interest payments, prompting governments and corporations to borrow even more, which in turn puts upward pressure on interest rates.

This scenario is likely not to unfold next Tuesday. Instead, it may play out as a slow-motion disaster. This could impact government budgets, election results, corporate financing, and interest rates for cars and homes in many countries. A steep upward trajectory awaits. Yes, it is already underway.