No. of Recommendations: 9
nytimes.com - Government debt bonds
Record Debt in the World’s Richest Nations Threatens Global Growth
The cost of borrowing is already choking crucial public spending in many developing economies. Now it’s raising broader alarms.
By Patricia Cohen, The New York Times, Jan. 27, 2026
For decades crushing debt has spread misery in the world’s poor and lower-income nations. But the menace of unsupportable borrowing that now hangs over the global economy emanates from some of the richest countries.
Record or near-record debt in the United States, Britain, France, Italy and Japan threaten to hamstring growth and sow financial instability around the globe.
At home, it means countries must make interest payments with money that otherwise could have paid for health care, roads, public housing, technological advances or education....
In six of the wealthy Group of 7 nations, the national debt equals or exceeds the country’s annual economic output, according to the International Monetary Fund....
The combination of low interest rates and elevated inflation particularly hurts working- and middle-income families, who see the value of their savings erode. [And conservative savers, including retirees, with low-interest paying bank accounts. -- W]...[end quote]
This article is about national debt crowding out national priorities, such as improving infrastructure. The CBO predicts massive increases in debt in the future.
St. Louis Fed (FRED): Federal Debt: Total Public Debt as Percent of Gross Domestic Product (GFDEGDQ188S) | FREDCongressional Budget Office: Publication 60870Even if the Federal Reserve cuts the fed funds rate the long-term bond yields will rise as the supply of bonds rises but demand stays the same or falls.
The yield curve is steepening.
stockcharts.com: Dynamic Yield Curve | StockCharts.com If the Federal Reserve does QE without an emergency inflation will rise. (Fed monetary stimulus was a big driver of the post-Covid inflation along with massive fiscal stimulus.)
The article doesn't mention the dramatic growth in margin debt which is driving the bubble in stock prices. Margin debt is now over $1.2 Trillion, roughly 4% of U.S. GDP ($30 Trillion) borrowed for pure gambling and speculation.
finra.org - Margin statisticsLet's think for a moment about the difference between paying cash and debt.
When you pay cash you own what you buy and the seller owns the value of whatever they sold you. End of story.
When a country or individual borrows, the borrower has to pay interest. If the borrower defaults the value simply disappears into thin air. The lender is stiffed. (Refer to the lenders who financed the 1999 expansion of internet infrastructure.) Also, the seller of the goods/ services is stiffed. The damage spreads from the deadbeat to the financer and the supplier.
Countries that go into debt with unsupportable promises that burden the future. Securities traders that risk the value of their investments simply evaporating as margin-financed speculators are forced to sell their good investments to meet margin calls. Or maybe this time will be different.
multpl.com - Shiller peWendy
