US Federal Debt Hits $40 Trillion as Yield Control Emerges

The Federal government of the United States is facing unsustainable debt dynamics as federal debt has reached approximately $40 trillion. This has resulted in a debt-to-GDP ratio of about 120%, with interest payments now nearing 20% of all federal receipts.

In response to persisting fiscal deficits and elevated long-term yields, policymakers are considering yield curve control. This strategy, which was last utilized in the 1940s, aims to manage long-term yields to stabilize the economy.

While such measures historically correlate with strong equity performance, they are likely to trigger high inflation. This outcome would benefit asset holders but erode the purchasing power of lower- and middle-class citizens.