BlackRock’s Larry Fink Sounds Alarm on America’s Mounting Debt Crisis

America’s “snowballing debt”—at $34 trillion and counting—is putting the country on course to end up in a crisis reminiscent of Japan’s lost decade, and Washington cannot take for granted the notion that investors will continue to fund its fiscal deficit forever, warns BlackRock CEO Larry Fink.

The CEO of the world’s largest asset manager also cautioned that the recent three percentage point increase in U.S. Treasury yields, to 4%—which reflects longer term inflation expectations and the Fed’s aggressive interest rate hikes—is already very dangerous, since it amounts to an extra trillion dollars in interest payments alone over the next decade.

“The situation is more urgent than I can ever remember,” Fink wrote in his annual letter to investors on Tuesday. “There’s a bad scenario where the American economy starts looking like Japan’s in the late 1990s and early 2000s, when debt exceeded GDP and led to periods of austerity and stagnation.”

The national debt is rising at a rate of $1 trillion roughly every 100 days, which itself is putting upwards pressure on consumer prices. That is partly why both assets believed to be inflation hedges like physical gold and Bitcoin—what some view as the precious metal’s virtual cousin due to its limited nature—are both at record highs.

“A high-debt America would also be one where it’s much harder to fight inflation, since monetary policymakers could not raise rates without dramatically adding to an already unsustainable debt-servicing bill,” he added.

Fink joins Fed chair Jerome Powell, JPMorgan CEO Jamie Dimon, Bank of America boss Brian Moynihan and Elon Musk in sounding the alarm. And while Joe Biden has been blamed for spending excesses stemming from the COVID recovery, the truth is the problems harken back much further as the country lurched from one crisis response to the next.

Gravity-defying economic growth fueled by fiscal deficits

Ever since the budget surpluses under Bill Clinton, the 24 subsequent years—split evenly between Republican and Democrat-led administrations—have seen spending get out of control with the debt rising by $26 trillion over the period due to expensive wars, generous unfunded tax breaks and Keynsian-style spending to combat deflating asset bubbles.

“When I talk about this statistic, I get frightened,” Fink told Bloomberg TV on Tuesday. “The cost of financing our deficits is going to erode more and more of our disposable income as a country.”

It’s precisely these elevated levels of U.S. government spending that have been fueling the country’s remarkable expansion that has defied the economic gravity that all other nations have faced of late, according to Jim Bianco,

Speaking last week, the president of Bianco Research explained that expenditure as a percentage of GDP remains at levels only eclipsed by a once-in-a-century pandemic and the 2008 financial crisis. In other words, stimulus is being pumped into the U.S. economy at a rate more indicative of a government fighting off a recession. In theory, that approach makes sense when consumers are beating a retreat, but that has not been the case of late.

“We are spending a lot more money than we ever have before,” Bianco said, arguing the GDP will artificially levitate as long as government expenditure continues to comprise an above-average 22% of overall economic output. “They’re spending like it’s the middle of a recession.”

This story was originally featured on Fortune.com

A Closer Look at HSBC’s New Gold Token

For over a decade, GoldSilver has championed the truth behind inflation — a truth now gaining recognition across mainstream media. A recent Forbes article echoes what Mike has long warned us about: the figures we’re shown barely scratch the surface of the true effect of inflation.

In another groundbreaking development, HSBC’s announcement of a new tokenized gold coin for investors in Hong Kong signals a potential revolution in gold investing. Is this a new era of gold investing, or merely a mirage reminiscent of paper gold investments?

We’ll dive into these topics and more in this week’s Nuggets. Let’s get started!

New Study Suggests Gold Standard Could End Price Volatility  
Researchers from the Federal Reserve Bank of Philadelphia published a study in February that says adopting a gold standard could lead to long-term price stability. According to their findings, prices would naturally align with their long-term equilibrium, making inflation and deflation temporary issues.

Gold Prices Climb As High As $2,224 per Ounce
Throughout the week gold has traded between $2,150 and $2,200, before climbing to new all-time highs Thursday, driven by possible expectations of interest rate cuts by the Federal Reserve later this year. Traders are currently pricing in a 64% chance of a June rate cut, according to CME’s FedWatch tool.

U.S. Consumer Optimism Climbs to Highest Levels Since July 2021
U.S. consumer sentiment has hit its highest peak since July 2021, fueled by the bull run in the stock market and the hopeful anticipation of dwindling inflation rates. The University of Michigan’s latest report reveals an impressive climb in the sentiment index to 79.4, up from 76.5, marking the largest mid-month leap in confidence since August 2022.

Fed’s Operating Losses Grew to Record $114.3 Billion in 2023
According to audited financial statements released Tuesday, the Federal Reserve reported an unprecedented operating loss of $114.3 billion in 2023, halting its payments to the Treasury due to high interest rates. The Fed’s interest expenses surged to $281.1 billion, driven by costs related to reverse repo operations, while its income from assets was $163.8 billion.


Nuggets Trivia of the Week

Gold is a precious metal that has long been used as a monetary resource as well as a highly desired material for jewelry. The chemical element symbol for gold is Au. What is the chemical element symbol for silver?

A. Si
B. Sl
C. Sg
D. Ag

Scroll to the bottom of this email for the answer…


Why Traditional Inflation Reports Fall Short

Grocery Shopper

For years, voices like Mike Maloney’s have warned thousands about the silent erosion of our purchasing power. Today, as the pain of inflation becomes impossible to ignore, more voices are joining the chorus Mike has been leading for years.

A recent piece from Forbes sheds light on one of the fundamental flaws in how inflation is traditionally reported. The focus on a mere 12-month snapshot obscures the true, cumulative impact of inflation, especially in light of the unprecedented monetary expansion during the Covid crisis.

“The cumulative 20% inflation rate means it now takes, on average, $120 to make a comparable $100 January 2020 purchase.”  

What this means in plain terms is alarming: What cost $100 in January 2020 now demands $120, effectively reducing your purchasing power to just 83 cents on the dollar. The 12-month inflation rate is often published as 4%, and that doesn’t sound too bad. Over the last four years, however, cumulative has reached 20%.

For those whose incomes haven’t sprinted ahead at the same pace, this oversight isn’t just an inconvenience — it’s a widening gap between preserving wealth and losing ground.

That’s why it’s more important than ever to take your personal finances into your own hands and shield your wealth from the erosive forces of inflation.

Add to Your Gold & Silver Today


A Closer Look at HSBC’s Gold Token

HSBC’s Gold Token

This week, HSBC dropped some big news: they’re bringing gold into the digital age for everyday investors in Hong Kong by tokenizing it. This could be a game-changer, making HSBC potentially the first bank to blend blockchain with real gold in a way that’s aimed right at folks in the retail market.

But before investing, let’s take a step back and read the fine print.

Enter Mike and Alan, our seasoned skeptics, who scrutinized the HSBC’s Principal Brochure to learn all the details about this new gold token. Turns out, there’s some extremely unsettling caveats right on the first page…

“You should note that investment in the Product is not the same as acquiring a physical gold bar…”

“Investors will not have the ability to take physical possession or delivery of the gold at any point even in the case of insolvency of the bank…”

“Suspension of dealing may be imposed by the Bank…”

In their latest video, Alan and Mike dissect these points one by one. Consider it a heads-up to keep a healthy dose of skepticism when it comes to digital tokens, IOUs, or anything that smells like “paper gold.”

These digital promises might sound convenient, but they’re missing the solid reassurance you get from holding real, shiny gold bullion in your hand.

Watch Alan and Mike’s latest video, where they break it all down, and get the facts for yourself.


That will wrap up another edition of GoldSilver Nuggets. We’ll be back next week with more news and updates!

Best,

Brandon S.  
GoldSilver

Gold Quote


Nuggets Trivia of the Week

Gold is a precious metal that has long been used as a monetary resource as well as a highly desired material for jewelry. The chemical element symbol for gold is Au. What is the chemical element symbol for silver?

A. Si
B. Sl
C. Sg
D. Ag

Answer – D. Ag

The chemical element symbol for silver is “Ag,” which comes from “Argentum” in Latin. Just like gold, which is represented by “Au” from its Latin name “Aurum,” the symbols for chemical elements often derive from their ancient or Latin names.

Gold’s Stellar Month Tipped by Fed’s Monetary Hints

By Kavya Balaraman and Anjana Anil

(Reuters) – Gold prices climbed on Thursday and were set to log their best month in over a year, bolstered by strong safe-haven demand, U.S. interest rate cut expectations and central bank buying.

Spot gold gained 0.5% to $2,204.99 per ounce as of 10:20 a.m. EDT (1420 GMT), eyeing its best month since November 2022 gaining around 8% so far, and a second straight quarterly rise. U.S. gold futures edged 0.7% higher to $2,204.80.

While there are some indications that inflation is running hotter than policymakers would like, that doesn’t necessarily explain the high valuations for gold right now, said Everett Millman, chief market analyst with Gainesville Coins.

“Maybe it has a bit to do with the fact that there are still major geopolitical tensions globally,” including in Gaza and Ukraine, as well as trade uncertainty, which could push investors to turn to gold as a neutral reserve asset, Millman said.

Gold hit a record high last week after the U.S. Federal Reserve anticipated three rate cuts in 2024. Traders are currently pricing in a 64% chance of a June rate cut, according to CME’s FedWatch tool..

“More signs of cooling price pressures may reinforce expectations around the Fed cutting rates – ultimately boosting appetite for gold. However, a sticky report will likely drag the precious metal lower,” said FXTM senior research analyst Lukman Otunuga.

The U.S. core personal consumption expenditure (PCE) price index report is due on Friday, which could help investors gauge the Fed’s policy stance.

However, Fed Governor Christopher Waller indicated on Wednesday that recent economic data could warrant a delay or reduction in the number of interest rate cuts.

Silver fell 0.2% to $24.60 per ounce, platinum rose 1.6% to $907.80 and palladium added 3.1% to $1,014.17. All three metals were bound for monthly gains.

(Reporting by Anjana Anil, Kavya Balaraman, and Sherin Elizabeth Varghese in Bengaluru; Editing by Tasim Zahid)

Beware of Synthetic Gold!

Discover the truth behind HSBC’s claim of tokenizing gold with Mike Maloney and Alan Hibbard. In this eye-opening discussion, they dissect the fine print of HSBC’s gold investment scheme. Learn why this supposed innovation might not be what it seems, the limitations investors face, and the significant risks involved. If you’re considering investing in tokenized gold or simply want to understand the implications, this is a must-watch.

Mike Maloney is more than just a legend in the precious metals industry. He’s on a mission to help everyone maximize their individual prosperity. Mike is best known as the host of the hit video series Hidden Secrets of Money and his extremely popular YouTube channel which has over 100 million views, where he reveals the truth about money, currency, and the flaws in our monetary system. Mike’s also a best-selling author of Guide to Investing in Gold and Silver, and The Great Gold and Silver Rush of the 21st Century. For nearly two decades, Maloney has traveled the globe, sharing his deep insights into economics and monetary history with diverse audiences, from Silicon Valley tech gurus to Wall Street financiers, and from Hong Kong business leaders to Roman scholars.  

Subscribe to Mike’s YouTube Channel for tons of free content. Or check out Mike’s latest book right here.

Why This Gold Bull Market Could Be Very Different

The implications for bullion and gold stock investors

Something is afoot with gold.

Before analysing the mystery, a question. Is gold overpriced?

The World Gold Council estimates that 6.8 billion ounces of gold are above ground. They are in jewellery, central bank reserves, bars, coins and exchange traded funds. At current prices, all this gold is worth $14.9 trillion.

The market capitalisation of “Magnificent Seven” stocks is $13.7 trillion. Either Microsoft, Apple, Nividia and the others are too expensive or gold is cheap.

Source Khaleej Times – Jewellery consumers in Dubai and India are resisting record prices.

The vast majority of analysts, traders and bankers are bullish. That may be a yellow warning light. A few expect bullion to rise to $2,500 an ounce. They cite favourable financial conditions. The Swiss National Bank is the first major central bank to cut interest rates. The US Federal Reserve Board and other central banks are forecast to follow. It’s an election year. Wars are dragging on.

After touching an all-time record of $2221 an ounce, gold has slipped below $2200. To sustain the upward trend gold must break through the barrier again. It should then remain there and be ready for another run.

The bull ring flags are intriguing. Dealers in the know aren’t telling.

“The stealth rally has caught Western forecasters by surprise,” says Ross Norman, CEO, Metals Daily and a former bullion dealer. “It suggests to me that the buying is beyond the purview of most of us.”

The following content is premium and requires a paid subscription to access.

(If you don’t wish to vault the premium paywall, kindly click Commodities Predict. The publication has free articles about Ukraine, Russia, cocoa, and water.)

Gold’s Behaviour Points to Sustained Strong Demand

Do note that this group of traders tends to anticipate, accelerate, and amplify price changes that have been set in motion by fundamentals. Being followers of momentum, this strategy often sees this group of traders buy into strength and sell into weakness. They are likely to have tight stops and no underlying exposure that is being hedged, and this makes them most reactive to changes in the fundamental or technical developments. In the short term, gold needs to hold key support levels in order to avoid a fresh round of profit taking, but so far the corrections seen have been shallow enough to prevent temporary price weakness through long liquidation. 

After hitting a fresh record high last week, gold suffered another mild round of consolidation, however without challenging support at USD 2,146 followed by USD 2,132. Moves that happen for no apparent reasons are often ones that deserve some respect, and today’s rally back towards USD 2,200 is one of them, happening without any notably support from other markets, highlighting a continued strong buying on dip mentality in the market. We maintain our 2024 forecast for gold to reach USD 2,300, and silver USD 28, with the technical picture pointing even higher towards USD 2,500.

Larry Fink Critiques India’s Gold Obsession: Little Economic or Investor Benefit

  • BlackRock founder and chairman Larry Fink said gold can be a good store of value but it does not stimulate economic growth — “It just sits in a safe.”
  • India is one of the largest markets for gold as the precious metal plays an important role in the country’s culture.
  • India’s central bank gold reserves have also hit an all-time high of 817 tons, according to data from World Gold Council.
Fancy anklets at an upscale jewellery shop in Thiruvananthapuram (Trivandrum), Kerala, India
Nurphoto | Nurphoto | Getty Images

India’s fondness for gold has neither benefited its economy nor generated decent returns for investors, BlackRock Founder and Chairman Larry Fink said in his annual letter to shareholders of the world’s largest asset manager.

“When I visited India in November, I met policymakers who lamented their fellow citizens’ fondness for gold. The commodity has underperformed the Indian stock market … Nor has investing in gold helped the country’s economy,” Fink said.

Gold can be a good store of value but it does not stimulate economic growth; when someone keeps money in a bank, or invests in a house there’s a multiplier effect that leads to economic activity — “But gold? It just sits in a safe,” he said.

India is one of the largest markets for gold as the precious metal plays an important role in the country’s culture. It is often considered auspicious to buy gold during weddings and festivals. It is also viewed as a safe investment and a symbol of wealth. 

Investing in gold can take many forms including buying jewelry, exchange-traded funds and sovereign gold bond schemes.

Fink emphasized the importance of capital markets and how they can improve a country’s economic standing as opposed to gold, citing the role of U.S. capital markets in the American economy.

“No other force can lift more people from poverty or improve quality of life quite like capitalism. No other economic model can help us achieve our highest hopes for financial freedom — whether we want it for ourselves or our country,” Fink said.

Consumption of gold in India has consistently been one of the highest in the world. The country’s central bank, the Reserve Bank of India, purchased 4.7 tons of gold in February, taking its gold reserves to an all-time high of 817 tons, according to data from World Gold Council.

Kavita Chacko, research head of India at World Gold Council, however, said recent record highs in gold prices could hurt demand for the precious metal in India.

“Demand is unlikely to see a notable uptick in the next couple of months, even should prices moderate, as the country’s impending general elections (April to June), will see the movement of gold and cash closely monitored,” Chacko said.

Indians’ love for gold aside, the country’s stock markets have been one of the biggest gainers in the Asia-Pacific region with major institutional investors positive on Indian stocks that have hit record highs multiple times this year.

— CNBC’s Lee Ying Shan contributed to this story.

HSBC Introduces Groundbreaking Tokenized Gold in Hong Kong

Tokenised gold assets are not a new concept – they surpassed US$1 billion in value globally in 2023, according to CoinGecko, a platform that tracks the industry.

‘We are proud that HSBC Gold Token, powered by HSBC Orion, is the first retail product in Hong Kong that is based on distributed ledger technology,’ said Maggie Ng, general manager and head of wealth and personal banking for Hong Kong at HSBC. Photo: SCMP Handout

“We are proud that HSBC Gold Token, powered by HSBC Orion, is the first retail product in Hong Kong that is based on distributed ledger technology, as authorised by the Securities and Futures Commission (SFC),” said Ng.

HSBC Orion is the bank’s digital assets platform.

The new product comes after Hong Kong’s markets regulator, the Securities and Futures Commission (SFC), released two circulars in November outlining requirements for tokenised products and assets to be offered to the public.

Tokenised products can be recorded digitally on the blockchain, offered directly to end-investors, distributed by intermediaries, or traded. They have the potential to reduce operational costs and promote efficiency and transparency, according to the SFC.

“Asset tokenisation can enable convenient, affordable and broad access to real-world and financial assets, in this case, the HSBC Gold Token,” said Sami Abouzahr, Hong Kong head of investments and wealth solutions at HSBC.

HSBC Gold Token is the first of a series of planned retail products that will use HSBC Orion.

Previously, the platform helped to tokenise physical gold in London for institutional investors and launch digital green bonds in Hong Kong.

01:48

‘Lift gold brick with one hand’: Chinese city’s US$1.5 million giveaway stunt

‘Lift gold brick with one hand’: Chinese city’s US$1.5 million giveaway stunt

Last month, the Hong Kong government completed the world’s first multicurrency digital bond offering worth around US$750 million. The bonds were directly issued onto HSBC Orion’s private blockchain as part of the Hong Kong Monetary Authority’s Central Moneymarkets Unit (CMU).

The blockchain-powered platform reduced the issuance settlement time from five days to one day and made secondary market trade settlements and coupon payments easier, according to HSBC.

“Investors had the option to follow largely business-as-usual processes through traditional market infrastructure, i.e. the CMU in Hong Kong and its external linkages with [clearing houses],” Darryl Chan, deputy chief executive of the HKMA, said at an event staged by the International Capital Market Association in Hong Kong on Tuesday.

“This has significantly broadened the bond’s investor base and enhanced its liquidity. It is fair to say that the issuance brought tokenised bonds further beyond proof-of-concept, towards achieving more common applications.”

At Tuesday’s Milken Institute Global Investors’ Symposium, HSBC Hong Kong’s chief digital officer Bojan Obradović said the blockchain ledger has “strong potential to be a mainstream component of future financial markets”.

HSBC is focusing on investing in distributed ledger technology, identifying which assets to develop as digital products, be it funds and bonds, tokens representing real-world assets or digital money, according to Obradović.

As well as working with the HKMA on its proposed central bank digital currency at the retail and wholesale levels, the lender is creating its own tokenised deposits and researching stablecoins.

The Hong Kong government is formulating a regulatory regime to sell stablecoins to retail investors. Stablecoins are cryptocurrency assets issued by private entities against a portfolio of traditional financial assets.

Obradović praised the government’s efforts to develop the sector.

“Hong Kong has got a real opportunity to become the world’s leading digital asset hub,” he said.

“How we get the buy and sell-side to come to Hong Kong and get real transactions to take place and have real economic value will be key.”

Inflation Reporting’s Blind Spot: The Cumulative Impact

All the inflation reports have a fatal flaw: A reliance on a moving, 12-month time period. The use of the latest, trailing twelve months is easy to get – It’s on the front page of the BLS’s monthly CPI report. But that doesn’t mean it’s the right number to focus on.

The latest twelve months ignores the total inflation period’s preceding months – the cumulative inflation period results that are fully with us today. That means examining the entire Covid period from January 2020, now entering its fifth year.

Why start then?

Because that is just prior to the Federal Reserve and the U.S. Government flooding the financial system with trillions of new dollars to counter the Covid recession. Such a significant money supply increase is always a key driver of inflation. Intensifying the effect of those easy money actions was the Fed’s return to near-0% short-term interest rates.

Here’s the money supply (M2) picture. Note the Fed’s promise to reverse the 40% money supply increase has only been a plateau.

  • January 2020 – $15.4 T
  • January 2021 – $19.3 T
  • January 2022 – $21.6 T (up 40%)
  • January 2023 – $21.2 T
  • January 2024 – $20.8 T

And here’s the Federal Funds rate picture. Note the long delay to start and to reverse the Fed’s low-rate, easy money strategy.

The need to track cumulative inflation

The dramatic inflation rise caused by the money actions (and inactions) did great damage the U.S. dollar’s purchasing power. The cumulative 20% inflation rate means it now takes, on average, $120 to make a comparable January 2020 purchase. (Mathematically, that means $1.00 is now worth only $0.83 in January 2020’s terms.)

The bottom line: An unhappy environment continues

Very important: That 20% four-year change is drastic. It may seem a happy occurence for stock investors whose companies are raising prices (revenues and earnings) to compensate. But, as always happens in inflationary periods, the millions of people whose income, savings and assets do not rise enough, if at all, there is distress and despair. They are the ones who must cut back on spending or run into financial troubles. (Already, late loan payments are on the rise, including for mortgages.)

What that means is key: The Federal Reserve’s self-congratulation on getting the 12-month inflation number down is false praise. They have created lasting damage for those that can least afford it.

Nigeria’s Central Bank Raises Interest Rate to Tackle Inflation

  • Minutes from the February meeting showed policymakers making the hawkish case for aggressive interest rate hikes to tame sky-high inflation, which came in at an annual 31.7% in February.
  • Nigeria’s naira currency plunged by around 70% against the U.S. dollar over the course of a year, hitting an all-time low of around 1,600 to the dollar in late February.
A pedestrian in the Lagos Island district of Lagos, Nigeria, on Monday, Nov. 14, 2022.
Bloomberg | Bloomberg | Getty Images

The Central Bank of Nigeria on Tuesday hiked its key interest rate by 200 basis points, as Africa’s largest economy looks to recover from a historic currency crisis and soaring inflation.

The CBN announced that its main monetary policy rate would rise to 24.75% from 22.75%, in its second consecutive hike after February’s 400 basis point increase.

Governor Olayemi Cardoso told a press conference that policymakers believed they need to continue tightening in order to tame runaway inflation, according to Reuters.

David Omojomolo, Africa economist at Capital Economics, said the latest move was “further evidence that officials are fighting aggressively to tackle the inflation problem and restore its damaged credibility,” despite being smaller than the previous increment.

“That may be a sign that some MPC members are concerned about the impact on growth from tighter monetary policy,” he suggested in a note on Tuesday.

“That said, the fact that officials delivered a larger-than-expected hike suggests that the fight against inflation, which stood at 31.7% y/y in February and is set to continue rising over the coming months, is taking precedence.”

Minutes published last week from the central bank’s February meeting had showed policymakers arguing the hawkish case for aggressive interest rate hikes to tame sky-high inflation, which came in at an annual 31.7% in February, up from 29.9% in January and the highest rate since April 1996.

Capital Economics expects further tightening, given Governor Cardoso’s need to bring down the curtain on the country’s inflation and currency crises.

“We have pencilled in further 100bp hikes at each of the next meetings in May and July before the hiking cycle is brought to a close. Policy will then probably be left on hold for the rest of the year,” he added.

Currency crisis

Nigeria’s naira currency has plunged by around 70% against the U.S. dollar over the course of a year, hitting an all-time low of around 1,600 naira to the dollar in late February.

However, it has since recovered some ground, trading around 1,400 naira as of Tuesday morning after the CBN announced that a $7 billion backlog of imports had finally been cleared.

IBADAN, Nigeria – Feb. 19, 2024: Demonstrators are seen at a protest against the hike in price and hard living conditions in Ibadan on February 19, 2024.
Samuel Alabi | Afp | Getty Images

The central bank’s February minutes revealed that members of the Monetary Policy Committee at the time held differing views on the drivers of inflation and naira weakness, which influenced their votes.

Though the MPC hiked rates by 400 basis points to 22.75% in February, there were arguments for hikes as small as 100 basis points and as large as 450 from committee members. Governor Cardoso had advocated for a 425 basis point move, Omojomolo noted ahead of Tuesday’s decision.

“Doves warned about the risk of hiking rates too aggressively and the structural nature of inflation, while hawks emphasised the need to restore the CBN’s credibility and move real interest rates into positive territory to further support the naira via extra foreign investment,” he added.

Fed’s Operating Losses Grew to Record $114.3 Billion in 2023

The Federal Reserve’s expenses exceeded its earnings in 2023 by $114.3 billion, its largest operating loss ever, forcing the US central bank to forgo remittances to the Treasury as interest rates remain elevated.

Interest expenses, which includes reserves balances at the Fed’s reverse repo operations, nearly tripled to a $281.1 billion in 2023, according to audited financial statements released Tuesday. Meanwhile, the Fed’s interest income earned on its portfolio of assets totaled $163.8 billion last year, compared with roughly $170 billion in 2022.

Debt Avalanche Ahead: BlackRock CEO Sounds the Alarm on U.S. Economy

(Bloomberg) — BlackRock Inc. Chief Executive Officer Larry Fink said the US public debt situation “is more urgent than I can ever remember” and that the country needs to adopt policies to spur economic growth.

Most Read from Bloomberg

The nation can’t rely on taxes and spending cuts to get the problem under control, Fink wrote in his annual letter Tuesday. He raised the prospect of a “bad scenario” akin to Japan’s economy in the late 1990s and early 2000s, which led to a period of austerity and stagnation.

“A high-debt America would also be one where it’s much harder to fight inflation since monetary policymakers could not raise rates without dramatically adding to an already unsustainable debt-servicing bill,” said Fink, 71.

The cost of servicing the debt has already ballooned, and the 3 percentage points in extra interest payments the US government now must pay on 10-year Treasuries compared with three years ago is “very dangerous,” he wrote.

“More leaders should pay attention to America’s snowballing debt,” Fink wrote, saying the US can’t take for granted that investors will continue to want to buy as much US debt. Foreign countries are building their own capital markets and are likely to invest domestically, he said.

“Is a debt crisis inevitable? No,” he wrote, calling for capital markets to help grow the economy through infrastructure investments, especially in the energy industry.

Most Read from Bloomberg Businessweek

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