Managing Debt and the Impact on Investments

The US government faces challenges with its substantial debt issuance, affecting yields and interest rates. Companies could borrow at lower yields, but high service level inflation and the Fed's rate policies keep rates high. There is concern about a potential debt crisis due to excessive debt levels, leading to difficulties in clearing market auctions. The Federal Reserve may need to step in by increasing its balance sheet. Countries like China and Japan have alternatives for funding, but the US must carefully address its increasing debt load. Policymakers need to address the debt issue over the next few years to mitigate future risks and uncertainties.