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The debt problem

Not even two months have passed since the last #debtceiling negotiation took place, when US Congress lifted the debt limit, and the US has already increased Treasury debt by $1Tn. This is probably not the pace we’ll see for the next 2 years, since new issuance has accelerated to compensate for the months where the debt ceiling didn’t allow the US treasury to finance the government, but it is indeed remarkable how fast and how furious the latest increase has been. To put numbers in perspective, $1Tn issued at 5% means an annual interest expense of $50Bn, which will allow you to buy 60% of all the #nba teams or rent 100% of the total office space in Manhattan for a month. Bear in mind that the budget deficit is increasing rapidly, and unless we see an increase in productivity, debt will continue growing, erasing value of the US dollar.


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Chart source: Bianco research



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