The U.S. national debt is approaching the point where bond traders see ‘mounting risk’ of a ‘vicious cycle,’ Moody’s top economist says
Source: Fortune ·
"A vicious cycle threatens to take hold, with higher rates adding to the interest payments and debt load, which in turn pushes rates up even more."
From the source
Policy optimists have long waved off concerns about a fiscal crisis in the U.S.: the moment at which the debt burden would grow so large that it would be either impossible to finance repayments or would require economic consequences. The national debt burden now stands at more than $40 trillion, but the U.S. remains the largest economy on the planet—why worry?Borrowing advocates also suggest that interest rates are elevated across many markets; the U.S. isn’t alone in relatively higher rates and therefore does not stand out as a cause for concern.But Moody’s top economist, Mark Zandi, believes he is seeing the first signs of discomfort in the Treasury market. He also says that while many nations will have to wrangle with their borrowing burdens, the scale of the U.S. economy means its situation is “far and away the most important one.” Zandi isn’t an outlier in his outlook. For many years, debt hawks (those concerned about the eye-watering levels of government borrowing) have warned…