Post

H/T: ZeroHedge

@Barchart Why not like it did in previous spikes? x.com/BachirK4/status/20928455…

@Barchart UK reached 270% in 1946. Japan reached 258% in 2020.

@Barchart At 175% debt-to-GDP, interest expense stops being a budget line and starts running the budget.

@Barchart x.com/asd_dhillon/status/20928…

@Barchart Everyone should be demanding that govt expenditures be cut or they are going to solve our debt problem with massive inflation and people on fixed incomes will be destroyed.

Net interest is already exceeding defense spending this year, about $1 trillion, and that’s before the debt-to-GDP ratio moves at all. The 175% headline is 30 years out and assumes current policy never changes, which it never does in any CBO baseline. The number that actually matters is closer: interest costs are set to roughly double to $2.1 trillion by 2036, and that’s the line that starts crowding out fiscal room for actual stimulus next recession.

@Barchart No. They will default.

@Barchart Congress just said hold my beer.

@Barchart Long-run debt projections matter through the discount-rate channel: heavier issuance can pressure term premia and crowd out private capital. For equities, the key is whether growth offsets a higher cost of capital.

@Barchart Whatever that economic key figure GDP is supposed to mean.

"Under current policies" is doing all the work — the CBO is legally required to assume nothing changes for thirty years, which has never once been true. The projection is a description of the current path, not a forecast, and the smooth curve is the giveaway: every historical spike on the left came from something nobody had modeled.

@Barchart It will go much faster then that ! 30 year? Bullshit!

@Barchart If that trajectory holds, the pressure on U.S. finances could be significant. @DigiMaaya believes investors will keep watching fiscal policy closely.