Story perspectives

Rising U.S. Debt Threatens Global Economy and Dollar Stability

10/17/2025

Summary

Story summary

Mark Zandi, chief economist at Moody's Analytics, warned that rising U.S. debt creates global economic risks as borrowing costs rise and bond volatility rises.
He described a 'doom loop' where higher debt reduces growth and investment.
A weaker dollar could spur inflation, prompting the Fed to raise rates.
Taken together, these dynamics threaten the dollar's role as global reserve currency and could fragment currency systems, reducing trade and investment flows.

History

Historical Context

The 2011 U.S. debt ceiling crisis stemmed from rising national debt, surpassing $14 trillion, and political gridlock over spending cuts. On August 5, Standard & Poor's downgraded the U.S. credit rating from AAA to AA+, marking the first downgrade in history. This event heightened borrowing costs and raised concerns about the dollar's status as the world's reserve currency, echoing ongoing fiscal challenges.

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Story summary

Mark Zandi, chief economist at Moody's Analytics, warned that rising U.S. debt creates global economic risks as borrowing costs rise and bond volatility rises.
He described a 'doom loop' where higher debt reduces growth and investment.
A weaker dollar could spur inflation, prompting the Fed to raise rates.
Taken together, these dynamics threaten the dollar's role as global reserve currency and could fragment currency systems, reducing trade and investment flows.

1 / 2