#USNationalDebt

The debt of the United States has reached a level of around $36.2 trillion (approximately 121% of GDP). The cost of servicing the debt (interest) now costs the treasury approximately $1 trillion annually, which exceeds defense spending. The growth of debt impacts not only the economic outlook but also global confidence in U.S. bonds.

⚠️ Why is this a current topic?

1. Concerns of central banks

The Central Bank of Taiwan has warned that the rapidly growing U.S. debt could weaken confidence in government bonds, affecting the global reserve system.

2. Regulatory response in the USA

Both the Fed and the Treasury are discussing adjustments to bank proposal parameters (e.g., SLR) to allow for greater purchases of government bonds and support demand for debt.

3. Political dispute

President Trump is pushing for lower interest rates to limit the cost of debt servicing. However, the Fed remains cautious, and the government plans further debt issuance – which increases the risk of fiscal dominance.

4. Credit rating threats

The recent downgrade by Moody's underscores growing skepticism about the sustainability of public finances.

📊 What does this mean for the average person?

Interest expenses are now competing with key items like defense or healthcare, and the growing debt further disrupts the state budget.

Additionally, rising debt puts pressure on long-term interest rates, affecting mortgages, corporate loans, and investments. Economists (e.g., Dalio, Rogoff) express concerns about a potential 'debt trap' if the credit line is not carefully managed.

🔮 Outlook & what to watch next

Bond yield developments – the yield curve on 2 and 10 years tends to remain high.

Fed meetings – despite banking pressures, planned interest rate cuts are expected in the second half of the year, which may not significantly affect long-term debt yields.

Congressional legislation – proposed packages like the 'One Big Beautiful Bill Act' may add additional trillions in debt.