Debts 03 - Govt etc (Feb 24 - Dec 26)

[winston]

$28 trillion of the national debt will have to be refinanced over the next four years

Interest rates are significantly higher today than they were several years ago. So when the Treasury Department refinances that $28 trillion in debt, it will be at a MUCH higher rate.

Think about it— if most of that debt was sold at a 2% rate, but now they have to refinance at 5%, then that’s an extra 3% interest to pay on $28 trillion— or $840 billion per year in additional interest.

Remember that the government’s interest bill is already $1.1 trillion per year. So in four years it could easily eclipse $2 trillion per year. Again, this is just the amount of interest.

It’s also pretty clear that a lot of foreign governments and central banks— who own a huge chunk of that $28 trillion which needs to be refinanced— are looking to diversify away from the dollar.

If foreign governments and central banks continue reducing their dollar exposure, then who is going to buy up all that $28 trillion worth of US government debt that needs to be refinanced?

Well, the only remaining lender is the Federal Reserve. And as we’ve discussed before, the Fed buys government bonds by printing money... which ultimately causes inflation.

During the pandemic, the Fed printed $5 trillion and we got 9% inflation. Over the next four years the Fed might have to print a good chunk of that $28 trillion just to help refinance US government debt. So what will inflation be? No one knows. But probably not their magical 2% target.

Source: Schiff Sovereign

[winston]

China Needs $3 Trillion Local Debt Solution, Top Economist Says

Regional authorities owe a total of 10 trillion yuan in arrears to contractors and civil servants. That’s equivalent to 7% of China’s gross domestic product last year.

A swap at a scale of 20 to 50 trillion yuan would be effective in relieving debt burdens around the country, allowing local authorities to better support consumers,

Local governments had over 47 trillion yuan in on-balance sheet debt as of the end of 2025. On top of that, they have about 60 trillion yuan in so-called hidden debt.

Source: Bloomberg

https://finance.yahoo.com/news/china-ne ... 05791.html

[winston]

Global debt marches to fresh record high, raising risk of bond vigilantes, IIF says

By Libby George

World's debt stock hit a fresh year-end record of US$318 trillion (RM1.4 quadrillion) .
The US$7 trillion rise in global debt was less than half of the 2023 increase.

Emerging markets, driven by China, India, Saudi Arabia and Turkey, accounted for roughly 65% of the global debt growth last year.

Source: Reuters

https://theedgemalaysia.com/node/745842

[winston]

Soaring global debt could trigger a crisis worse than 2008

by Andrew Wong

This increasing debt is likely to drive bond yield rates up, leading to potential debt crises in various nations.

Many governments are also increasing their military spending, further driving up overall government expenditures and debt levels.

Source: The Standard

https://www.thestandard.com.hk/section- ... -than-2008

[winston]

Rich Asian investors opt to unwind holdings amid margin calls

Some Singapore investors cut trades, doubting chances of a strong market rebound

Volatility has surged with nearly US$10 trillion wiped off global equities as signs of strain like frozen corporate debt markets and a jump in gauges of default risk emerged.

Source: Bloomberg

https://www.businesstimes.com.sg/intern ... rgin-calls

[winston]

Global debt hits record of over US$324 tril, banking trade group says

By Rodrigo Campos

Global debt rose by around US$7.5 trillion (RM31.7 trillion) in the first three months of the year to hit a record high of over US$324 trillion.

China, France, and Germany were the largest contributors to the global debt increase, while debt levels declined in Canada, the UAE and Türkiye.

Total debt in emerging markets rose by over US$3.5 trillion in the first quarter to a record high of more than US$106 trillion. China alone accounted for over US$2 trillion of the rise.

Source: Reuters

https://theedgemalaysia.com/node/754256

[winston]

Countdown to Crisis 2033.

The numbers don’t lie. The national debt has topped $36 trillion, with interest now devouring 23% of tax revenue.

Based on the government’s own numbers, by 2033 that could hit 40%, just as Social Security runs out of money.

The only ‘solution’ will be for the Federal Reserve to flood the system with freshly ‘printed’ dollars. That’s the trigger for runaway inflation.

Source: Schiff Sovereign

[behappyalways]

The Big and Beautiful Bill has led to the US debt crisis.
Can the "Pennsylvania Plan" stop the bleeding in three ways?
Chen Fengxin points out the "time point for the depreciation of the US dollar and the Taiwan dollar"

大而美法案釀美國債務危機 「賓州計畫」三招能止血？陳鳳馨點出「美元、台幣貶值時間點！」【#風向龍鳳配】｜CC字幕

https://m.youtube.com/watch?v=jTebXMp_s4Q

[behappyalways]

US government debt is expected to continue to surge over the next 7 years, all the way to $51 trillion
https://x.com/Mayhem4Markets/status/1944720731406840042

[winston]

The numbers don’t lie

US national debt headed for $50T+ by 2033. Eight years away.

At just 6% interest, that’s $3T/year in debt service— 40%+ of tax revenue.

And that’s the same year Social Security becomes insolvent, i.e. trillions more in bailouts.

Foreign buyers are backing away from US government bonds. So the Fed will be forced to print—again.

This will almost certainly result in widespread inflation. And that’s before factoring in the inflationary effects of tariffs.

Source: Schiff Sovereign