The US is a rich man borrowing against his assets
Debt crisis predictions fail as a wealthy sovereign that borrows in its own currency doesn’t fail on a schedule
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AMERICA’S national debt crossed US$40 trillion in August. Interest on that debt now costs more than the country’s entire defence budget.
The 30-year Treasury yield touched 5.34 per cent on Aug 18 – its highest level since 2007 – and the curve has steepened as the front end remains anchored.
If you add the uncertainty and tension between a US Federal Reserve biased towards hiking rather than cutting, oil that refuses to fall, core inflation stuck at more than 3 per cent, and a “new” America that treats allies as adversaries, you get this year’s most popular story: The US has finally borrowed too much, and its currency will pay for it.
