America’s Debt Just Flunked the Smell Test
Bond markets are quietly walking away — and Canada and Europe are starting to look like the adults in the room
Here’s something you won’t hear on cable news.
The U.S. didn’t get downgraded by a ratings agency.
It got downgraded by reality.
By bond traders.
By the most boring, conservative, spreadsheet-obsessed people on Earth.
And when those people start backing away from your debt?
That’s not politics.
That’s survival instinct.
America’s national debt just hit $38.6 trillion.
The Congressional Budget Office flat-out said the path is “not sustainable.”
Not “challenging.”
Not “manageable.”
Not “needs reform.”
Unsustainable.
That’s accountant language for…
“This thing eventually breaks.”
This isn’t about debt size
Every developed country carries debt.
Europe averages around 88% debt-to-GDP.
Canada’s gross number looks higher at 106%.
So on the surface?
Nobody looks angelic.
But markets don’t price numbers.
They price behaviour.
And this is where the U.S. starts looking like the drunk uncle at Thanksgiving.
Europe and Canada have rules
America has arguments
In the EU, when governments overspend?
Automatic penalties kick in.
Spending caps.
Forced corrections.
Legal limits.
Not suggestions.
Actual enforcement.
France? Already under restrictions.
Belgium? Capped.
Finland? Capped.
If they screw up, Brussels tightens the leash.
Boring.
Predictable.
Responsible.
Bond markets love boring.
Now look south of the border.
The U.S. “system” is basically…
• raise the debt ceiling
• suspend the debt ceiling
• fight about the debt ceiling
• then spend anyway
It’s fiscal management by soap opera.
No binding guardrails.
No automatic brakes.
Just Congress yelling on TV.
That’s not a framework.
That’s vibes.
And the bill is getting ugly
By 2036?
America is projected to spend $2.1 TRILLION per year just on interest.
Not schools.
Not roads.
Not healthcare.
Not defence.
Interest.
Money that produces absolutely nothing.
Over the next decade?
$16 trillion in interest payments.
Roughly $47,000 per person.
That’s like buying every citizen a brand-new pickup truck…
…and lighting them all on fire.
Meanwhile… little boring Canada
Here’s the punchline nobody talks about.
Canada’s borrowing costs are now 1.2–2% LOWER than the U.S.
Biggest gap in over a century.
Let that sink in.
For most of modern history, U.S. debt was the safest thing on Earth.
Now markets are saying…
“Actually… we trust Canada more.”
Not because we’re saints.
Because we’re predictable.
We’ve got pension assets offsetting debt.
We’ve got frameworks.
We’ve got boring finance nerds running the books instead of campaign slogans.
Turns out… that matters.
History already proved this
Back in the 90s?
Canada was a mess.
Debt over 100%.
The Wall Street Journal basically called us a third-world economy.
So what did we do?
We didn’t argue.
We cut spending.
Hard.
About $7 in cuts for every $1 in tax hikes.
Within a few years?
Surplus.
Credibility restored.
Done.
Markets remember stuff like that.
Trust compounds.
America is doing the opposite
Recent policies alone added…
• $1.4 trillion extra deficit in one year
• $4.7 trillion more projected deficits
• shrinking workforce from immigration cuts
• slower job growth
• higher interest costs
It’s like revving the engine while the gas tank’s on empty.
Then acting shocked when the car coughs.
Here’s what the bond market is really saying
This isn’t a math problem.
It’s a trust problem.
Europe…
“We overspend, rules force us to fix it.”
Canada…
“We screw up, we tighten belts.”
USA…
“We’ll argue about it after the election.”
Guess which one investors prefer?
The quiet shift
Central banks aren’t just buying bonds.
They’re buying predictability.
So money is drifting.
Toward Europe.
Toward Canada.
Away from Washington chaos.
No speeches.
No headlines.
Just trillions moving quietly.
Like adults leaving a bad party.
And that’s the part most Americans don’t see
Empires don’t collapse because someone attacks them.
They collapse because lenders stop trusting them.
Trust is the real reserve currency.
Lose that?
Everything costs more.
Forever.
The Recap…
Bond traders just did something quiet… and brutal.
They started trusting Canada and Europe more than the U.S.
$38.6 trillion in debt.
$2.1 trillion a year just in interest.
No fiscal guardrails.
This isn’t politics anymore.
It’s math.
The Gut Punch…
You don’t lose “safe haven” status with a bang.
You lose it when accountants start whispering.
Source credit
Based on analysis of recent U.S. CBO projections, IMF data, EU fiscal framework rules, and public bond market trends.
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#CanadaStrong
Many Americans may not realise it yet, but almost everything Trump does adds to or subtracts from the world's view of the country.
# Insult your allies - they look elsewhere for future support.
# Increase tariffs on a whim (remember the Heard Islands with only penguins?) - trading partners look elsewhere for their goods.
# Threaten to annex territory (Canada, Greenland) - they gather their new partners to make sure it doesn't happen.
# Play flip/flop with Ukraine and Russia - Europe starts paying attention and steps up to help Ukraine.
# Slow release the Epstein Files - everyone wonders what Trump is hiding, does some investigative work themselves, and heads start to roll.
Economies are built on trust, stability, fair trading, predictability. Everything that Trump can't provide.
Great piece again today, Fred. No one is saying much about the sales of US. Bonds that has been taking place. I wonder how long it will be before someone in the US government ( Congress or Senate) will step up and start following the money