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?
The era of cheap government debt is coming to an end, as evidenced by the recent actions of major institutions and the rising yields on US Treasuries. Norway's sovereign wealth fund plans to reduce its $215 billion investment in US bonds by $80 billion, signaling a shift in global investors' confidence towards the country's debt.
The US debt has surpassed $40 trillion, with interest payments now exceeding $3 billion daily. As a result, the Federal Reserve is trying to lower yields through bond buybacks, though the measure is insufficient to address the growing debt burden. Despite the challenges, most economists believe investors will remain invested in the US economy, as it remains a major player in the global market.
However, the competition from private companies, particularly in the AI sector, is intensifying, making government bonds less attractive to investors.
Written by urgent.news from DW Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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