The fact even BlackRock now is cautioning about the ballooning debt is hilarious. 38 trillion is an insane amount and just paying interest on the debt is unfathomable for average people.
I do like he cautions that the whole AI hype bubble is causing a lot of people to ignore the debt, but honestly, he is right. There is no concrete profit being made by AI so far just due to sheer scale and costs of data centers. And while this is now the primary investment into the US economy, it will be a bubble that will burst and will bust badly.
Not only are a lot of data centers exempt from taxes in regards to construction and usage (some data centers will only be taxed in 10 years) but they are just a massive drain. Given that we are already seeing a bubble, I sincerely doubt a lot of smaller municipalities and counties will survive this so easily. Lots of infrastructure that will become waste or minimal usage while tax payers are on the hook for them somehow.
And this will be the key issue for the debt too: once it pops we can all bet our lives that there will be massive government bailouts again which will cause even more debt to be issued. And given the US is pissing off almost all strategic partners, the question inevitably will be who will hold our debt.
wormtheology on
Of course he’s issuing a blunt and non-descript warning. Remember, if Larry Fink makes a bad speculative bet, the US citizens will be on the hook for it, not BlackRock. There was only one banker jailed for the 2008 financial crisis. The next inevitable financial crisis will have absolutely no difference. In the meantime, the US citizens will bear the brunt of 3% YoY inflation which is already entrenched deep within the economy. There will be no voting your way out of it and the monetary fentanyl will be back in full swing before we know it to *attempt* to balance out the debt-to-GDP ratio.
CoderCanuck on
Not a single comment on the tax cuts causing the surge. Not a single comment on the expenses/entitlement programs. He’s just wishing for “grow the way out of it”.
No talk of fiscal responsibility or balance from either “partisan” approach.
How about moderate tax increases and some limitation on spending growth? That will also improve the debt-to-gdp. Yes it will dampen growth to a degree potentially. Hope is not a strategy.
questionnmark on
The issue is that all the bond markets are looking shaky, the Japanese bond market hit a 27 year high and others such as France are looking shaky as well. I wonder if once the bubble burst we’ll be plunged into a sovereign debt crisis.
yrotsihfoedisgnorw on
Do we even know where the debt is at this point? Trump talked about tariff revenue solving everything, especially after DOGE was going to trim so much spending. But he also seems to be spending some multiple of tariff revenues and DOGE came nowhere close to its goals. $38t is a commonly cited amount but is it right?
Biuku on
This issue is not just monetary and fiscal but also *geopolitical*.
The number may not be evident yet, but there is also a market debt ceiling, and the US seems intent on discovering it. Room to maneuver is shrinking.
With a third of US debt held by countries the US is antagonizing, a kind of geopolitical convexity will arise where the power of a group of bondholders over the United States rapidly escalates from moderate to near total.
Slowly, then quickly.
GhostofBeowulf on
So it is odd to me that there is such a huge fuss around the national debt now with republican majorities.
If you are as old as I am, you know the debt generally only becomes an issue when certain parties are incumbents, and by the other party that pretends to practice fiscal restraint when in minority and then throws principle out the window when they win. I mean, even Reagan’s great “hello, I’m from the government and I am here to help” speech was him bragging about his farm subsidies.
I know the interest payment on that debt a real problem, but who exactly is going to raise taxes? Or are classic liberals/neoliberals/conservatives starting to turn on Trump and going to use this to try and turn the Democratic party into the neoliberal party they have always wanted to be? Or is this the ploy to begin inflating our debt away? We have already resumed printing money.
39% debt growth under the first failed presidency of the convicted felon p3d0
Now they will finish the job. That is why gold and silver are going hyperbolic
Diazigy on
OR, we can tank the economy and create hyper inflation so the debt functionally goes to zero. This has the added benefit of asset owners getting even richer.
Kalorama_Master on
Bollocks! I was under the impression after the excel error was found on the Reinhart and Rogoff research this topic was dead and buried.
US tax rates are abysmally low compared to Europe and in particular for the rich and capital class.
Ergo, we can outgrow the current debt level well before it is a true burden and have plenty of room to raise the funds should we need to show commitment
dlc741 on
Sounds like we need to crank up the top tax brackets and start cutting military spending. That should help get the deficit back under control and start paying down the debt.
11 Comments
The fact even BlackRock now is cautioning about the ballooning debt is hilarious. 38 trillion is an insane amount and just paying interest on the debt is unfathomable for average people.
I do like he cautions that the whole AI hype bubble is causing a lot of people to ignore the debt, but honestly, he is right. There is no concrete profit being made by AI so far just due to sheer scale and costs of data centers. And while this is now the primary investment into the US economy, it will be a bubble that will burst and will bust badly.
Not only are a lot of data centers exempt from taxes in regards to construction and usage (some data centers will only be taxed in 10 years) but they are just a massive drain. Given that we are already seeing a bubble, I sincerely doubt a lot of smaller municipalities and counties will survive this so easily. Lots of infrastructure that will become waste or minimal usage while tax payers are on the hook for them somehow.
And this will be the key issue for the debt too: once it pops we can all bet our lives that there will be massive government bailouts again which will cause even more debt to be issued. And given the US is pissing off almost all strategic partners, the question inevitably will be who will hold our debt.
Of course he’s issuing a blunt and non-descript warning. Remember, if Larry Fink makes a bad speculative bet, the US citizens will be on the hook for it, not BlackRock. There was only one banker jailed for the 2008 financial crisis. The next inevitable financial crisis will have absolutely no difference. In the meantime, the US citizens will bear the brunt of 3% YoY inflation which is already entrenched deep within the economy. There will be no voting your way out of it and the monetary fentanyl will be back in full swing before we know it to *attempt* to balance out the debt-to-GDP ratio.
Not a single comment on the tax cuts causing the surge. Not a single comment on the expenses/entitlement programs. He’s just wishing for “grow the way out of it”.
No talk of fiscal responsibility or balance from either “partisan” approach.
How about moderate tax increases and some limitation on spending growth? That will also improve the debt-to-gdp. Yes it will dampen growth to a degree potentially. Hope is not a strategy.
The issue is that all the bond markets are looking shaky, the Japanese bond market hit a 27 year high and others such as France are looking shaky as well. I wonder if once the bubble burst we’ll be plunged into a sovereign debt crisis.
Do we even know where the debt is at this point? Trump talked about tariff revenue solving everything, especially after DOGE was going to trim so much spending. But he also seems to be spending some multiple of tariff revenues and DOGE came nowhere close to its goals. $38t is a commonly cited amount but is it right?
This issue is not just monetary and fiscal but also *geopolitical*.
The number may not be evident yet, but there is also a market debt ceiling, and the US seems intent on discovering it. Room to maneuver is shrinking.
With a third of US debt held by countries the US is antagonizing, a kind of geopolitical convexity will arise where the power of a group of bondholders over the United States rapidly escalates from moderate to near total.
Slowly, then quickly.
So it is odd to me that there is such a huge fuss around the national debt now with republican majorities.
If you are as old as I am, you know the debt generally only becomes an issue when certain parties are incumbents, and by the other party that pretends to practice fiscal restraint when in minority and then throws principle out the window when they win. I mean, even Reagan’s great “hello, I’m from the government and I am here to help” speech was him bragging about his farm subsidies.
I know the interest payment on that debt a real problem, but who exactly is going to raise taxes? Or are classic liberals/neoliberals/conservatives starting to turn on Trump and going to use this to try and turn the Democratic party into the neoliberal party they have always wanted to be? Or is this the ploy to begin inflating our debt away? We have already resumed printing money.
[https://www.svb.com/market-insights/us-treasuries/the-federal-reserve-ends-qt-key-market-liquidity-insights/](https://www.svb.com/market-insights/us-treasuries/the-federal-reserve-ends-qt-key-market-liquidity-insights/)
[https://www.reuters.com/business/finance/fed-says-will-start-reserve-management-treasury-bill-buying-2025-12-10/](https://www.reuters.com/business/finance/fed-says-will-start-reserve-management-treasury-bill-buying-2025-12-10/)
39% debt growth under the first failed presidency of the convicted felon p3d0
Now they will finish the job. That is why gold and silver are going hyperbolic
OR, we can tank the economy and create hyper inflation so the debt functionally goes to zero. This has the added benefit of asset owners getting even richer.
Bollocks! I was under the impression after the excel error was found on the Reinhart and Rogoff research this topic was dead and buried.
US tax rates are abysmally low compared to Europe and in particular for the rich and capital class.
Ergo, we can outgrow the current debt level well before it is a true burden and have plenty of room to raise the funds should we need to show commitment
Sounds like we need to crank up the top tax brackets and start cutting military spending. That should help get the deficit back under control and start paying down the debt.