Deutsche Bank Links U.S. Debt Funding to AI Productivity

Analysts at Deutsche Bank argue that an updated version of Knut Wicksell's 1898 economic theory explains why investors continue to fund the nearly $40 trillion national debt of the United States despite high deficits. According to the bank, the U.S. maintains a natural rate of interest—the return investors receive from the broader economy—that remains significantly higher than official rates.

This economic environment is largely driven by high returns on equity within the technology sector and a dominant U.S. position in artificial intelligence. The bank suggests that high productivity growth from AI hyperscalers is currently replacing the geopolitical factors that previously attracted inward investment.

While the analysts acknowledge that the U.S. is fundamentally living beyond its means, they warn that this dynamic creates a fiscal loop. Because government investment in AI requires further borrowing to maintain the confidence that sustains the sector, the U.S. remains dependent on continued technology-driven growth to manage its fiscal instability.