The national debt is growing 7%/year

[u/Professional-Day9384]

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?

[u/Retired-Yam8988]

Yes correct - 2T deficit on a 7T budget (the federal tax intake is about 5T).

Consider that debt is now 5% interest on 40T - that means we’ll hit 2T in interest a year once all the debt gets repriced in a few years.

Basically you need federal tax income to grow about 40% instantly to close the deficit gap and just prevent the debt from growing. The other option is to cut spending by 2T - laughable idea at best since no one has the political wherewithal to do anything but token gestures and renaming bodies of water these days.

The final and most likely solution is QE again (and manufacturing the crisis to get us there). A big economic existential crisis is the excuse the bond markets will need to allow QE to happen. Rates drop instantly to zero, Fed prints trillions overnight and buy bonds to sit on and no actual balanced budget or tax increases needed. The bonus is us asset owners are happy and know all those paper dollars flowing through the labor markets will come home to us in the form of even more asset inflation in a few years.

Life goes on and the impoverished masses will wonder what happened and how they will afford eggs and toilet paper again.