Part 8/10:
The reality is that debt servicing costs are rising sharply, with the U.S. spending nearly $500 billion on debt interest alone in merely five months. As the debt continues to grow beyond 120% of GDP, this creates a precarious situation where sustained high deficits could lead the U.S. into a debt spiral—where increasing servicing costs necessitate further loan procurement.
Moreover, should investor confidence in the U.S. dollar wane, the consequences could be dire. The U.S. depends heavily on global trust in its economic stability, and any decline in demand for U.S. Treasuries could heighten the risks surrounding national debt. The possibility of a shift towards other bonds could lead to an unsustainable backlash against U.S. borrowing practices.