Debt spiral
From Conservapedia
A debt spiral is worsening economic situation by which a country, company, or individual must taken on increasingly large new debt to pay off interest and principal on old debt.
As explained about the U.S. debt projected to reach about $40 trillion:
| “ | If the current debt trajectory continues unabated, it could set off a slow motion debt spiral that could endanger the Federal Reserve’s independence. ... [I]nvestors typically demand more risk compensation as the U.S. deficit increases, especially when there is competition from an ample supply of safe assets globally. Thus, Treasury yields rise.
... [T]hese two factors together lifted the natural 10-year real yield for Treasuries by 1.3 percentage points between 2005 and 2023.[1] |
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