Is America Heading for a Debt Crisis?

All that stands between the U.S. and a debt-market freakout is the dollar. Having the world’s reserve currency isn’t the unbreakable shield many assume.

Warnings of bond pressure have shown up in extreme situations. Most recent was the April revolt, where 10-year Treasury yields jumped and concern grew about a self-fulfilling liquidation of borrowing, akin to the U.K.’s Truss moment, before President Trump pulled back.

In 2020, lockdowns showed how bad such a selling spiral can be, and the Federal Reserve was forced to buy more than $1 trillion of bonds to stabilize the market.

What saves American finance is the dollar’s status as the must-have global asset and trading currency. 

U.S. runs near-record peacetime deficits on top of a bulging current-account deficit. America has to attract a constant flow of foreign capital to finance government and imports, an unstable position.

If the problem sounds familiar, it should be. Former Luxembourg Prime Minister and European Commission President Jean-Claude Juncker once said: “We all know what to do, we just don’t know how to get re-elected after we’ve done it.”

America has the dollar to lean on—but probably not forever.

James Mackintosh WSJ Nov. 29, 2025

https://www.wsj.com/finance/investing/uk-budget-debate-us-debt-lessons-38bc52e3

 

For a country like the US—one that runs persistent current account deficits—government deficits are perfectly normal and almost always necessary to achieve healthy economic outcomes. 

Stephanie Kelton March 2022

https://englundmacro.blogspot.com/2025/09/for-country-like-usone-that-runs.html


Varningsord om USAs statsfinanser; vad hände 2008? och Sveriges primära budgetöverskott

https://englundmacro.blogspot.com/2025/08/varningsord-om-usas-statsfinanser-och.html


 





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