Geopolitics & money, explained calmly
Explainer · Money and power
Two well-known investors say heavy US government borrowing will squeeze everyone else. Part of that holds up.
Published Tuesday 27 October 2026. US budget figures are for the fiscal year that ended 30 September 2026. Rate figures are the latest available; the Federal Reserve’s next decision is due on Wednesday 28 October.
On 16 September the Fed raised its key short-term rate, the federal funds rate (the rate banks charge each other), by a quarter of a percentage point to 3.75–4.00%. Its next decision is due on Wednesday 28 October. The 10-year Treasury yield, the interest rate on 10-year US government debt, was 5.00% on 26 October (US Treasury).
In fiscal 2026, federal receipts were $5,403bn and spending $7,396bn (Treasury). Interest alone cost $1,052bn, 19.5 cents per dollar collected (our arithmetic).
On 26 October Dalio, founder of investment firm Bridgewater Associates, posted an 87-second video on X. We checked only its caption; we haven’t verified what the video says or when it was recorded.
The caption says that when rates rise, the government “just keeps borrowing, and everybody else gets squeezed out”. That is crowding out. The well-off are squeezed last, it says, while “the lower 60% of the population and companies without the financial capability to borrow will feel it first”. Tighter credit then cuts profits and share prices. It gives no data and doesn’t say whether “lower 60%” means by income or wealth.
The data show weaker borrowers are more exposed, not that they feel it “first”.
Gromen, founder of research firm FFTT, wrote on X on 26 October that “the US cannot pay interest + Entitlements without printing money”. In a second reply he forecast that rates will briefly fall, then rise until the system collapses or the Fed or Treasury “prints the money to cap those yields”. Both are forecasts, and “printing money” is undefined.
It depends what you count.
CBO’s projections cover the gap by borrowing from the public, not by creating money. It projects federal debt held by the public rising from 100.6% of the economy’s annual output (GDP) in 2026 to 120.2% in 2036. It warns that “borrowing costs throughout the economy would rise, reducing private investment” (crowding out, in effect) and that the risk of a fiscal crisis would grow.
Caveat: CBO’s projections predate the Iran war and the September hike, and assumed the 10-year yield would average 4.1% in calendar 2026; it was 5.00% on 26 October (Treasury).
The Fed’s purchases of Treasury bills (short-term government debt) aim to keep “an ample level of reserves” for banks, not to cap yields. By law it can buy only “in the open market”, not from the government directly.
What each source thinks (views, not facts)
The US must print money to pay interest and entitlements.
Government borrowing squeezes everyone else, weaker borrowers first.
Counterpoint (CBO)
CBO’s projections see borrowing, not printing, with rising costs and less private investment.
US regular gasoline averaged $4.284 a gallon in the week of 19 October (EIA). Government borrowing doesn’t set pump prices directly.
Grocery prices (food at home) were up 1.8% over the year to September, and all food 2.5% (BLS). Any link to government borrowing is indirect.
The average 30-year fixed rate was 7.32% in the week to 22 October (Freddie Mac). When government yields rise, borrowing tends to get dearer for homebuyers.
The FDIC’s national average savings rate was 0.38% in October, far below the Fed’s range, so Fed moves reach typical savings accounts slowly.
Reflection Point
In fiscal 2026, interest, Social Security and Medicare took 70% of what the US government collected (Treasury; our arithmetic). CBO projects that share reaching 83% by 2036.
Every fact is dated and linked; views are labelled as views. Read how we work. Spotted an error? Tell us at hello@thebigpicturebrief.com.
