Traders work on the floor of the New York Stock Exchange shortly after the opening bell, Wednesday, April 24, 2024, in New York.
The bellwether 10-year U.S. Treasury is yielding about 2 percentage points more than its best international rival — the 10-year German government bond. That’s impressive against the historical record. By 2030, U.S. debt held by the public could easily reach 110% of GDP. Then interest payments would grow more rapidly than nominal GDP. Washington policymakers would risk a run on the dollar in international financial markets and face unattractive choices:
Fourth, they could slash Biden-era initiatives to improve infrastructure and industrial policies to catch up with auto, battery, green energy and semiconductors with rivals in China and elsewhere in Asia. As demonstrated during the Obama years by the pharmaceutical giants, businesses can move abroad and take sizable taxable income with them if threatened by a hostile and confiscatory regime.