Japan’s bond market sends a cautionary message to the United States
The Changing Perspective on Government Debt and Interest Rates
For years, the prevailing belief was that government debt posed little risk as long as interest rates remained close to zero. This idea was not limited to fringe thinkers—many respected economists also subscribed to it. The consensus suggested that with borrowing costs so low, the United States could safely accumulate debt without concern. As a result, national debt levels climbed, and those who voiced caution were often dismissed, with critics frequently referencing Japan as proof. Japan, after all, maintained minimal interest rates even as its debt soared past 200% of GDP. Yet, real-world developments have a tendency to challenge even the most widely accepted theories, and now...
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