Moody's top economist Mark Zandi warns the U.S. national debt could trigger a 'vicious cycle' as rising interest rates increase borrowing costs, potentially leading to higher rates still.
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01Summary
- 01The U.S. national debt exceeds $40 trillion, with a debt-to-GDP ratio of 126%.
- 02Zandi says the 10-year Treasury yield has risen by about one percentage point this year, one of the biggest increases among major economies.
- 03The U.S. posted a $2 trillion deficit for the fiscal year ending October, with over half spent on interest payments.
- 04Ray Dalio predicts an economic 'heart attack', while Kent Smetters expects inflation to resolve the crisis.
02Why it matters
Rising yields on U.S. Treasuries increase borrowing costs for the government, which could eventually lead to higher taxes or reduced public services, affecting household finances.
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