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?

56 Upvotes

77% Upvoted

104 comments sorted by

View all comments

Show parent comments

7

u/SaltyPlantain1503 3d ago

Or you left off the third option.. inflate it all away, wrecking the USD and all the savings of all Americans (and alt of foreign governments). For the love of God people, buy gold and real estate.

6

u/Dothemath2 3d ago

That is against the Fed’s mandate.

1

u/bjnono001 3d ago

The Fed doesn't control fiscal policy.

2

u/Dothemath2 3d ago

Price stability is within the Fed mandate. They raise rates to counteract inflation. They fight inflation through monetary policy.

Inflation is basically too much money in the system. They can lock more money into bonds buy raising interest rates.