Sooner or later, government debt will devastate the economy. That’s a message we hear often (especially in election years). But the U.S. has mocked the fiscal scolds, delivering consistent GDP growth over the past 10 years even as total federal debt has doubled to a benumbing $35.4 trillion. One reason for the run of luck: Treasury bills, seen as ultrasafe, attract hordes of buyers despite paying very low interest, enabling Uncle Sam to run huge deficits without short-term repercussions.
But economists point out that inflation can bring that party to an ugly end—forcing governments to pay higher interest to lenders, and then to borrow more to pay that interest. Such cycles have sunk smaller economies (think Argentina or Greece). The U.S. economy is a far sturdier ship, of course—but the Titanic was pretty solid too.
A version of this article appeared in the October/November 2024 issue of Fortune with the headline “America’s debt: Sky-high and rising.”
More from the October/November issue of Fortune:
–What businesses can expect in a Kamala Harris presidency
–What the Fed rate cut means for investors
–Where Silicon Valley is spending its millions in political donations, charted
–Who has time for a power lunch? The real business happens at 4 p.m. ‘power hour’