Not far from Times Square in Midtown Manhattan, a giant screen displays a fast-changing string of 14 digits. Soon the number will flip above $35tn, as the quantity of US government debt spirals to a new record. There is space on the US debt clock for another couple of digits, allowing the display to reach into quadrillions. The only snag: the trajectory of America’s debt burden already feels unsustainable.
Over dinner at the swanky Cafe Boulud on New York’s Upper East Side, Hungarian-born brokerage billionaire Thomas Peterffy regaled me with stories of his business successes while also striking an alarming note about the debt burden. “It’s inevitable,” he predicted. “Whether it’s five years from now, or 20 years from now, the US will default on its national debt.”
Peterffy, who grew up in communist Hungary, sounded strangely sanguine about the idea, citing the debt restructurings of other major economies, including during the Eurozone crisis of the early 2010s. But there can be little question that for the world’s biggest economy, and the home of the world’s reference currency, debt default would cause a major global meltdown.