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The key fact is that, after decades of falling and low interest rates, they are now up to historically normal levels and will stay up.

That is what makes the United States’ debt burden dangerous.

Interest on the debt now approaches $1 trillion per year,
more than total defense spending.

Economic historian Niall Ferguson has suggested that when this happens, a great power risks that it will no longer be great.

Rogoff predicts an economic storm
— and one that will come a good bit sooner because of Trump’s economic policies.

He believes that,
unless these policies are drastically reversed,
there is a 50 percent or more chance of a financial crisis
or spiraling inflation
or both by the end of this presidential term.

Some of the pressures we face are because of events outside America’s control.

Other countries have always resented the dollar’s exalted status, especially once the U.S. began to weaponize it.

Washington has promiscuously imposed sanctions on dozens of countries,
often unilaterally,
and these sanctions work only because of the dollar’s special status.

The Europeans, the Chinese, the Russians and mostly every large country is quietly making efforts to wean themselves off their dependence on the dollar.

It’s a slow process but it is moving in only one direction
— away from the dollar.

And while there is no single substitute for America’s currency,
Rogoff believes the dollar will lose share to a basket of other currencies as well as alternatives,
such as bitcoin.

This is not all about Trump.

Rogoff argues there has been a bipartisan recklessness in U.S. fiscal policy for decades,
with Republicans cutting taxes and Democrats spending
— both without restraint.

(It is worth noting, however, that the math is clear:
Tax cuts are responsible for the vast majority of the increase in the debt-to-GDP ratio over the last 25 years.)

He is also profoundly worried that the Federal Reserve’s independence is being compromised both from the right and from the left

(though it is worth noting that Trump is the first president to routinely attack the Fed,
threaten to fire its chair and challenge the legality of such independent institutions in court.)

“Much of the dollar’s role comes from our reputation for good, stable, predictable policy,
from the Fed’s independence from political pressures,
from our trustworthiness as the world’s superpower.

You can’t trash all that and expect the dollar to be unaffected,” Rogoff says.

https://www.washingtonpost.com/opinions/2025/05/09/debt-budget-defense-dollar-bust/