How rising US debt could compound into a crisis, according to ‘bond king’ Jeffrey Gundlach

Jeffrey Gundlach warns that America’s mounting national debt risks reaching unsustainable levels, potentially leading to dollar devaluation or debt restructuring. Writing in The Economist, the DoubleLine Capital founder highlighted that the federal deficit, now at $1.83 trillion (6% of GDP), could push public debt to 122.4% of GDP by 2034. Higher interest rates exacerbate the problem, increasing borrowing costs and fueling a debt spiral.
Gundlach cautioned that a recession could further reduce tax revenue, forcing the government to print money, driving inflation and bond yields higher. By 2034, debt servicing could consume up to 83% of tax revenue at high rates. While Gundlach suggests drastic action is needed, others propose measures such as reducing inefficiencies and reassessing tax policies.