The U.S. must roll over $7 trillion in government debt by the end of the year, with $2 more trillion coming due by May 2026. Much of this debt was issued at 2%, whereas rates are currently over 4% for ten-year bonds and over 5% for 30-year bonds. Mission impossible.
The Moody’s downgrading of U.S. debt has not helped. Dark clouds are also gathering over Japan, the number-one purchaser of U.S. debt. On Monday, May 19, the Prime Minister said the situation of his country is worse than Greece was in 2011. He ruled out a tax cut because it is impossible to finance it with new debt. “It’s important to recognize the dangers of a society and a world with interest rates. The government is not in a position to comment on interest rates, but the reality is we are facing a world with them. Our country’s fiscal situation is undoubtedly extremely poor, worse than Greece’s,” he said.
