When Debt Stops Being a Forecast

At modest levels, debt is a policy tool. At extreme levels, interest becomes the policy.

By 2026, net interest expense is on track to rival — and in some years exceed — the largest line items in the federal budget. Independent budget trackers now rank interest among the top two federal outlays, alongside Social Security.

That matters because interest has no constituency. It crowds out everything else.

In debt-heavy periods, assets labeled “safe” often behave differently than expected.

Yields can lag inflation.
Rules can change mid-cycle.
Taxes and thresholds get adjusted quietly.

The risk isn’t a single shock.
It’s slow dilution.

That’s why analysts increasingly warn that relying on yesterday’s playbook in today’s fiscal environment can turn protection into a trap.

Past debt adjustments unfolded over decades. This one is accelerating.

The result is a compressed timeline where policy responses arrive earlier and less cleanly.

It’s about volatility without resolution.

Markets move, but don’t clear.
Policies shift, but don’t stabilize.
And capital preservation starts to matter more than chasing returns.

In those environments, structure beats optimism.

The most dangerous assumption today is that there’s still plenty of time.

When debt reaches this scale, adjustments don’t arrive on schedule. They arrive early, unevenly, and quietly.

Those who recognize that shift first tend to make fewer forced decisions later.

Written by Deniss Slinkins
Global Financial Journal