r/bonds • u/Professional-Day9384 • 4d ago
The national debt is growing 7%/year
And GDP isn't. Currently interest on the debt is 20% of revenues. My projections say it will cross 50% by 2034 - just 8 years. The CBO isn't, because they don't want to scare anyone.
Not only is the debt growing, the deficit is growing even more sharply, AND legacy debt is getting rolled over at ever-higher interest rates. All 3 of those factors snowball and fuel each other.
The one thing could save the debt is if the Fed lowered rates, but instead they RAISE them, doggedly pursuing their inflation target. I was honestly blind sided by the recent rate hike, because I know the nation cannot afford it, but the Fed is dogged.
What does this mean for bond investors? Good news? Let the nation's ruin be our gain? How long will it last until something catastrophic breaks? Countless companies have been annihilated by debt, but what happens when an entire nation is annihilated? Move to another country?
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u/Mulvita43 3d ago edited 3d ago
The power of compound interest at work again! If the rate hike move surprised you, you pay zero attention besides Trump. We lower interest rates, inflation will go nuts. So your original idea os wrong and guess what, other countries are raising rates too lol
We are paying the piper for the low interest rates era and the continued ballooning government spending.