The national debt of the United States has reached an unprecedented level, surpassing $33 trillion in just three months. This alarming increase of almost two trillion dollars is the largest single debt in the history of humanity, and it is clear that it can never be fully paid off. The situation has reached a terminal phase, and our options now involve prolonging the agony rather than finding a solution.
Unfortunately, this is not just a problem for the United States. Governments all over the world have been on an unprecedented debt binge, seemingly getting away with it for years. However, recent developments in the bond markets and rising interest rates have created great turmoil. The sell-off in government bonds has pushed up the cost of debt for many nations, leading to problems for mortgage borrowers, stock investors, and businesses.
The rise in interest rates stems from expectations among investors that major central banks will keep rates higher for longer in order to bring down inflation. As a result, investors are selling their current bonds and buying newly issued ones that offer higher interest payments. This causes bond prices to fall and yields to rise. Yields on long-term government bonds have reached alarming levels, with 30-year US government bonds reaching 5%, the highest level since 2007.
This global bond market sell-off presents enormous problems for governments worldwide. Rising yields make it increasingly expensive for governments to borrow money, jeopardizing their ability to fund public services and investments. Countries like Germany and Italy are facing rising yields on their bonds, reminiscent of the eurozone debt crisis in 2011. The situation is dire, and there seems to be no way out.
If we had acted responsibly from the beginning, the outcome may have been different. However, our fate is now sealed, and our politicians continue to spend money recklessly. In fact, the US government added $275 billion to the national debt in a single day, bringing the total debt to over $33 trillion. The worst part is that this spending is often wasteful and extravagant, with billions of dollars spent on frivolous things like office furniture during the pandemic.
The borrowing and spending spree we are on will eventually lead to the devaluation of the US dollar, rendering it nearly worthless. Renowned author Robert Kiyosaki has compared the future value of the dollar to toilet paper, highlighting the lack of financial education and awareness among the American population. Most Americans do not realize the consequences of excessive borrowing and spending, simply because they do not understand basic economics.
When debt rises faster than income for an extended period, pain is inevitable. This is true for individuals drowning in debt, and it is true for countries drowning in debt. Our country is on a collision course with disaster, and time is running out. While politicians are doing their best to keep the debt spiral going, it is clear that this unsustainable path will not end well.
It is essential for us to educate ourselves about finances and push for responsible government spending. Our children and grandchildren deserve a bright future, and it is our responsibility to make the necessary changes to ensure that happens. The countdown to economic disaster has begun, and it is up to us to change the course before it is too late.