{"id":4879,"date":"2026-08-04T11:37:22","date_gmt":"2026-08-04T11:37:22","guid":{"rendered":"https:\/\/crosscountrymovingteams.com\/?p=4879"},"modified":"2026-08-04T11:37:22","modified_gmt":"2026-08-04T11:37:22","slug":"an-130-year-old-theory-from-an-obscure-swedish-economist-explains-why-investors-will-keep-funding-americas-near-40-trillion-pile-of-debt","status":"publish","type":"post","link":"https:\/\/crosscountrymovingteams.com\/?p=4879","title":{"rendered":"An 130-year-old theory from an obscure Swedish economist explains why investors will keep funding America\u2019s near-$40 trillion pile of debt"},"content":{"rendered":"
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Deutsche Bank believes an updated version of Wicksell\u2019s theory explains why investors can\u2019t quit the U.S., despite the fact that many indicators of its economic health are flashing red: The might of the U.S. economy coincides with its eye-watering debt: some $39.77 trillion at the time of writing, requiring service payments of $24 billion a week.<\/p>\n

Read more Current price of Bitcoin for August 4, 2026<\/a><\/p>\n

So far, lenders to the U.S. haven\u2019t demanded wildly higher rates of return on their loans, reflecting the dollar\u2019s unique role in global finance and confidence in America\u2019s economy. However, if growth rates remain dwarfed by deficit levels, perceptions of risk may shift, prompting a market recalibration, as JPMorgan Chase CEO Jamie Dimon has previously warned.<\/p>\n

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In a note by Deutsche Bank\u2019s chief investment office, Dr. Ulrich Stephan, Dr. Dirk Steffen, and Elena Ahonen, write that these sustained deficits show a country that is \u201cfundamentally living beyond its means,\u201d but that America\u2019s role in the international financial system has so far allowed it to \u201cenjoy risk-free market interest rates that were below its estimated natural rate of interest.\u201d<\/p>\n

That advantage is narrowing, the trio writes. <\/p>\n

The silver bullet<\/h2>\n

The risk balance of investing in the U.S. vs simply keeping money in the bank has meaningfully shifted in a world of AI led by U.S. hyperscalers, the Deutsche team argues.<\/p>\n

\u201cThe high return on equity (ROE) available on some U.S. sectors (e.g. tech) is now complementing or, to some degree, supplanting the structural\/geopolitical factors which have so far supported inward investment in the U.S. during the post-WW2 period,\u201d the trio writes. \u201cTo oversimplify: you could argue that U.S. deficits are, in effect, being increasingly funded by its tech sector.\u201d<\/p>\n

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They explain: \u201cIn the last few years, investor interest in the U.S., and thus its ability to sustain deficits, has \u2026 been supported by the country\u2019s relatively high productivity growth and high return on equity, largely the result of the country\u2019s successful technology sector and dominant position in artificial intelligence.\u201d<\/p>\n

Arguments from the likes of Bridgewater Associates founder Ray Dalio that the U.S. is living beyond its means remain \u201cfundamentally true\u201d, the team adds, but suggest investors are now happy to funnel funds into U.S. deficits because, as a country, it offers higher returns on investments compared to other destinations.<\/p>\n

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Yet this dominance creates a fiscal loop: If the U.S. government stopped investing in AI, then confidence in the sector would shake. This spending, in itself, requires further borrowing. \u201cThe U.S. economy can therefore be seen, in some ways, as both a gainer and a victim of its own success,\u201d the team concludes. <\/p>\n

Read more Current price of oil as of August 4, 2026<\/a><\/p>\n

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Deutsche Bank, drawing on Knut Wicksell’s theory, suggests why investors will continue to fund US national debt thanks to AI.<\/p>\n","protected":false},"author":1,"featured_media":4878,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[170],"tags":[],"class_list":["post-4879","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-national-debt"],"yoast_head":"\nAn 130-year-old theory from an obscure Swedish economist explains why investors will keep funding America\u2019s near-$40 trillion pile of debt - Cross Country Moving Team<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/crosscountrymovingteams.com\/?p=4879\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"An 130-year-old theory from an obscure Swedish economist explains why investors will keep funding America\u2019s near-$40 trillion pile of debt - 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