Diamond News

Great Speculations

For the 2020 fiscal year, the federal budget deficit is expected to hit a massive $1 trillion—the first time in U.S. history that it will have expanded so rapidly in a time of peace and prosperity.

The most recent estimate by the Congressional Budget Office (CBO) puts total federal debt at a whopping 144 percent of gross domestic product (GDP) by 2049. This level of debt is not only unprecedented but also unsustainable. It puts everyone’s financial security at risk.

U.S. Public Debt as a Percent of GDP

U.S. Global Investors

And if you’ve been keeping up with the Democratic presidential debates, things could get even worse. Medicare-for-all, the Green New Deal, reparations—these programs, while admirable and potentially beneficial, would add trillions more to the already-ballooning national debt.

Remember, it’s the policies that we should be paying attention to, not partisan politics.

Years ago, it might have taken $1 trillion to move the U.S. economy by 2 percent of GDP. What is that number today? It might take $10 trillion or more.

Total U.S. Public Debt Outstanding, in Trillions

U.S. Global Investors

Low, Low Corporate Bond Yields Encourage Record Borrowing

Speaking of debt, you may have heard that a record number of companies last week sought financing in the bond market. It’s no coincidence they rushed to the trough all at once. Average yields for investment-grade corporate debt are near an all-time low right now, making borrowing very inexpensive and attractive. Apple, Deere, Walt Disney and Coca-Cola were among the record 49 companies that issued as much as $54 billion through this past Wednesday. Apple alone sold $7 billion, its first bond deal since 2017....

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