Interest Consumes 40% of Income Taxes, U.S. Treasury’s Unsustainable Path Raises Default and Inflation Fears

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The interest payments on the national debt alone used up 40% of all the money collected from individual income taxes in October. This means a significant portion of the taxes paid by individuals goes just towards paying the interest on the money the government has borrowed.

The US Treasury is now spending almost twice as much on interest compared to the previous year, which is a concerning and unsustainable trend. Despite this, the government continues its spending, raising questions about the potential outcomes. There are concerns that this situation might lead to a choice between defaulting on the debt or dealing with inflation.

Moreover, an unusual occurrence has emerged in global bond markets: yields on bonds from emerging-market countries in their own currencies have dropped below yields on US Treasuries for the first time on record. This unexpected shift raises further questions about the stability of the global financial landscape.

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