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Leading global economists are warning of the threat of a large-scale debt crisis in the US, which could be crucial for the entire global economy in the coming years. Despite the fact that last week the US Treasury successfully held a 30-year bond auction, which was accompanied by strong investor demand, experts believe that this is only a short-term relief in the context of the systemic problem of explosive growth in public debt.
To date, the total amount of US government debt has exceeded $37 trillion. This level of debt is already causing concern among a number of think tanks and investors, who previously considered US Treasury bonds to be “risk-free”. Goldman Sachs analysts invited three influential experts to discuss the situation – investor and founder of Bridgewater Associates Ray Dalio, Harvard professor Ken Rogoff and historian Niall Ferguson. Their conclusions were unanimous: The United States is on the verge of a financial collapse that could be even more painful than the 2008 crisis or the inflationary shock of the pandemic period.
Ray Dalio, known worldwide as one of the most influential hedge fund managers, calls the situation a “debt-induced economic heart attack”. According to him, the US government is now in a dangerous triangle: high interest payments, which are already absorbing a significant portion of budget revenues; a lack of investors willing to buy more and more bonds; and the need for the Federal Reserve to buy back the excess, which could lead to inflation and dollar devaluation. According to Dalio, to avoid a catastrophe, the administration should immediately reduce the budget deficit to no more than 3% of GDP. For comparison, in December 2024, this figure was 7%.
Professor Ken Rogoff, former chief economist at the International Monetary Fund, believes that the US debt crisis could occur within the next 4-5 years under current fiscal policy. This is much earlier than previously expected. He emphasises that a widening of the deficit in the face of already marginal debt is a recipe for a major correction. Among the possible consequences, Rogoff names a powerful inflationary shock or attempts to hold the financial system together by artificially lowering rates and controlling capital flows, which will hit American savings. The expert urges not to hope for the return of the era of “cheap money”, as higher rates, according to him, will become the new normal.
The British-American historian and economist Niall Ferguson adds another disturbing sign to this picture: in 2024, US debt service spending exceeded defence spending for the first time. According to the so-called Ferguson’s Law, this is a critical moment for any major power – when debt service begins to consume more resources than defence. Historically, such circumstances have preceded the loss of the status of a geopolitical superpower. In 2024, the United States spent $1.1 trillion on interest payments, while the defence budget was $883.7 billion.
Ferguson also points out that despite the dollar’s continued leadership as the global reserve currency, confidence in US debt instruments has begun to decline. The decline in foreign investment in US bonds is indicative of the growing wariness of international markets. The historian admits that he has been warning of US fiscal irresponsibility for two decades, but today he sees that “the wolf he cried out for is already at the doorstep”.
The current situation in the US is a warning not only for the US government, but also for the global financial system. If even the world’s most powerful economy is unable to contain its debt spiral, the repercussions could be felt far beyond Washington, from stock markets to households in Europe, Asia and Latin America.
