Why the era of cheap government debt is over
US debt has topped $40 trillion. How risky is the growing debt burden, and will investors keep funding Washington's deficits?
Norway's $215 billion sovereign wealth fund aims to reduce its US bond holdings by $80 billion. The US national debt surpassed $40 trillion in August, leading to a nearly 5.4% yield on 30-year Treasury bonds. High-debt nations like Japan and Italy face rising borrowing costs. The US spends $1 trillion annually on interest payments, more than $3 billion per day.
The Federal Reserve's measures to lower yields have proven insufficient. Despite concerns, economists believe the US will maintain its debt status, as alternatives like the European capital market or China are not yet viable.
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