World Nears Crisis as US Debt Tops 120% of GDP and Politics Cripple Response
Updated
Updated · The Guardian · May 25
World Nears Crisis as US Debt Tops 120% of GDP and Politics Cripple Response
1 articles · Updated · The Guardian · May 25
Summary
US federal debt above 120% of GDP is identified as the biggest immediate fault line, with investors already rattled by higher Treasury yields amid war and inflation fears.
A sell-off in Treasuries could force a brutal choice: let borrowing costs surge or have the Federal Reserve buy bonds, risking faster inflation and a weaker dollar.
Washington’s politics make either response harder, with Donald Trump portrayed as willing to pressure the Fed, expand deficits and face little resistance from Republicans in Congress.
Global imbalances deepen the risk because the US still depends on foreign capital while China keeps recycling trade-surplus savings into US assets instead of boosting domestic demand.
France’s budget strains and weak prospects for international coordination suggest the next shock could be handled worse than 2008, not better.
With US debt nearing $39 trillion, what happens to the global economy when investors finally stop buying it?
As global debt and energy shocks loom, are central banks truly out of ammunition to prevent the next crisis?
Is the opaque $3.5 trillion private credit market a hidden financial time bomb, despite official reassurances?
America’s Debt at 120% of GDP: Looming Fiscal Crisis and What Must Be Done
Overview
As of May 2026, the U.S. national debt is a major concern, shaping the country’s fiscal outlook. Despite this, U.S. Treasuries are still seen as some of the safest assets in the world, thanks to strong investor confidence that brings stability. However, recent weeks have shown a shift in the long-term bond market, with yields on 20- and 30-year Treasuries rising. This change signals growing pressure and uncertainty, highlighting the need to closely watch how investor confidence and market trends interact with the nation’s evolving debt situation.