| The mounting federal debt threatens our economy, our financial markets, and even our national security. As time and basic math take their inevitable toll, the result will be unpleasant. That's why I agreed to argue the "danger" side of the equation. Let me explain why... The U.S. national debt already stands at more than $36 trillion - roughly 125% of GDP. To put $36 trillion in perspective, a million seconds was 11.6 days ago. A billion seconds was 31.7 years ago. But a trillion seconds? That was 31,709 years ago. Think about that. Our national debt is in the tens of trillions. We have politicians spending numbers that astronomers won't touch. The annual budget deficit for the current fiscal year is on track to exceed $1.9 trillion, despite full employment and record tax revenues. Unlike the temporary spikes we saw during COVID-19 or wartime spending, this isn't a one-off. This is structural. We're borrowing more just to keep the lights on - financing entitlements, interest payments, and routine government operations. As you've probably heard, interest on the debt alone is about to surpass defense spending. And it is projected to become the largest single line item in the federal budget by 2030. And yet, Washington shrugs. This fiscal recklessness isn't just an economic issue. It's a moral and civic one. The problem isn't that entitlement programs are unaffordable. It's that no one in either party has the political will to say so. Politicians campaign on benefits but not on how to pay for them. The result? Chronic deficits, voter complacency, and ultimately, betrayal of future generations. The national debt could best be described as "theft of the unborn." And the drag on the budget has three obvious effects: - Crowding out private investment: Higher government borrowing means higher rates, which hurts corporate financing and consumer credit.
- Reduced flexibility in a crisis: If the next recession, war, or pandemic hits, we'll have far less room to respond.
- Geopolitical vulnerability: Foreign governments - particularly China and Japan, which together hold over $2 trillion in U.S. Treasuries - gain leverage over American policy.
In short: debt isn't just a fiscal problem. It's a market risk. And a national security concern. Right now, investors seem numb to the debt story. And it's not hard to see why. The bond market is stable, the dollar remains the world's reserve currency, and U.S. Treasuries are still considered the ultimate "safe asset." But trust is fragile. History shows us that markets don't price in long-term risks gradually - they reprice violently when the dam finally breaks. Think of the United Kingdom's gilt crisis in 2022. Or Greece in 2010. If confidence in U.S. fiscal discipline falters, we will see... - A further downgrade in U.S. creditworthiness
- A spike in Treasury yields
- And a steep selloff in both bonds and equities
While no one can predict the exact turn, the trajectory is plain to see. In short, the national debt is a ticking time bomb. Yet politicians - and their constituents who enjoy receiving more in government benefits than they pay for - simply don't want to reckon with the math. But the longer we defer that reckoning, the worse the consequences become. Stein's Law famously states the obvious: if something cannot go on forever, it will stop. The U.S. cannot borrow endlessly without consequences. At some point, there will be havoc in the financial markets. And the result will be slower economic growth, more taxes, lower asset values, less global influence, and a diminished standard of living. In short, the metastasizing federal debt is the most predictable crisis in American history. That's not fear-mongering. That's arithmetic. So why would my debate opponents disagree with this analysis. And what should investors do to protect themselves? That's what I'll cover in my next column. Good investing, Alex | 
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