Topic #1: Let's talk about US Federal government and business debt levels. Such conversations are usually laden with fire and brimstone narratives, but we will avoid those as much as we can. Let's just focus on the facts and see where they lead us.

First, here is total Federal public debt as a percent of GDP. This does not include intragovernmental holdings ($6.5 trillion currently, mostly held by entitlement programs), but it does capture the general trends quite well.

Three points about this graph:

US government debt as a percent of GDP has risen dramatically over the last +50 years, from lows around 30 percent in 1980 to 125 percent today.

The pattern of this growth is both structural and cyclical. Debt/GDP was at its lowest during this time series in 1980, when Treasury yields were at their highest. As yields fell, borrowing increased. But … Debt/GDP actually declined in the mid-late 1990s as strong labor and stock markets increased tax receipts. The Great Recession, which brought lower tax receipts and stimulative fiscal spending, increased debt issuance once again. The Pandemic Crisis had the same effect.

The US now has a higher Debt/GDP ratio than the Eurozone (95 pct) and the United Kingdom (88 pct), as well as China (78 pct) and India (87 pct).