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Ken Fisher Discusses US National Debt Fears – June 2024

In this episode, Fisher Investments’ founder and Co-Chief Investment Officer Ken Fisher addresses a common investor concern—US national debt.

Want to dig deeper?

In this episode, Ken shares his perspective on US national debt. To find out more about how inflation’s side effects are a silver lining as they pertain to debt’s affordability, read “What Many Miss About US Debt Today.” You’ll also learn why despite widespread debt fretting, the often overlooked American debt-to-GDP has come down considerably since 2020.

Ken also addressed the affordability costs of US debt. To learn more, watch “Fisher Investments’ Founder, Ken Fisher, Debunks: “America Can’t Handle Its Debt.” This video debunks many common misperceptions about US debt, including a closer look at debt-servicing cost affordability.

Have questions about capital markets, investing or personal finance? Email us at and we may use them in an upcoming episode.


Naj Srinivas

Hello and welcome to the Fisher Investments Market Insights podcast, where we discuss our firm's latest thinking on global capital markets and current events.

I’m Naj Srinivas, Executive Vice President of Corporate Communications here at the firm. Today, we’ll hear from founder, Executive Chairman and Co-Chief Investment Officer of Fisher Investments, Ken Fisher.

In this episode of Market Insights, Ken answers some common listener questions to help you better understand the world of finance and investing.

But before we dive in, I'd like to ask you a favor. Recommend our podcast and rate it wherever you listen. In just a few minutes, you can help make this valuable information available to even more people. Thanks so much for your help, in advance.

With that, let's dig in with this month’s Ken Fisher mailbag. Enjoy.


Ken Fisher

Every month, some people write in these questions. These little, short ones. I try to answer them quickly. I'm not really good at answering anything quickly. I if you've heard me before, you know that. I kind of have a little disease, a blabbermouth.

But here's this first one that says, Japan was heavily in debt and their stock market stalled. Will U.S. debt do the same for us? No. Interest payments as a percent of GDP or as a percent of government revenue are actually at very normal levels. They're at lower levels than they were in the 1990s at about the same level that they were in the early 60s, but if you really did have a debt problem, you'd see that in very high long term interest rates compared to the ones that we have now, which are historically very normal. Japan had very different circumstances. It wasn't Japan's debt that did Japan in, and it was its lack of ability to innovate successfully. And as other parts of the world engaged in what I would view as more free trade capitalism and adapted better, the Japanese model, which was largely more of a top down control of the economy, export based, more like the pre-capitalism concept, in economic evolution of mercantilism which you can and read about online, if you wanted to. They got eaten alive by China emerging and doing a lot of the same things that Japan had done well up before. But the analogy of trying to compare Japan to the United States, that doesn't hold up.

Once upon a time, dinosaurs roamed the face of the earth. When they did. The dinosaurs feared there was too much debt. Fear of debt. Debt phobia. Government debt in particular, I’m referencing about, has been around all my life and longer and I'm almost a dinosaur myself. When this septuagenarian was just a wee lad, in the days when Barry Goldwater was running for president, and I remember this very well. There was fear that Lyndon Johnson was going to create too much debt for our country and destroy it. Now, mind you, I'm going to tell you that the fear of excess government debt tends to fluctuate a little bit this way when you have a Republican president. There tend to be a lot more Democrats that are afraid of the debt problem. When you have a Democratic president, tend to be a lot more Republicans that are afraid of the debt, as always, in some ways partially masked as an attack on whatever party holds the white House. But this fear is always there. And it is, how do I say this? There's ways to measure this correctly, and almost no one ever does, because the emotion is what drives the way people look at it.

How should you look at it? Well, there's a couple that are the right way, but none of them lead you to a view that the debt as it exists in the United States of America is actually a material problem. And people will not accept that because they're so convicted on this. That's one of the things that I always love when I think about markets is what risks do people have wrong?

And they are so convicted of them by their emotion or their biases that they can't see through them. The right way to see this is several; 1. What's the carrying cost of the debt relative to either normal government revenue or the size of the economy, both of which are relevant since government revenue comes out of the size of the economy.

The fact of the matter is, and people will not get this, that fluctuates over time. But as we speak right now, total government debt has annual payments that on the one hand, as a percent of GDP, are the same level they were when Barry Goldwater ran for president when I was a lad. People don't get that. They've been higher, rising up into the 1990 period as both debt and interest rates rose.

They peaked in that period and then started to fall fairly well. In the 90s, they were twice the level they are now of interest payments as a percent of government revenue and interest payments as a percent of GDP. We are now at those same levels from when I was a wee lad, but actually at the time I was 13 years old.

And then I got to tell you, the 1960s were marvelous, a wonderful time, but I think this is a marvelous time, too. People always look fondly on the past, and they don't quite get that decades from the present, they're going to look fondly on the present. The fact of the matter is that another way to think about this, which nobody wants to think about. Free markets set long term interest rates. They just do. They're pretty efficient. Perfect no, pretty efficient? Yes. If we really had a debt problem because we've had a lot of countries in history that have had debt problems, you know, what happens, countries long term bond rates go through the roof at levels that make where we are today look like the biggest bargain basement you could possibly ever imagine.

The markets already told you we don't have a debt problem. All you got to do is look at interest rates and see that. Go back and look, for example, during the so-called pigs crisis, at the interest rates of places like the pigs. If you remember, Portugal, Italy, Ireland. Greece. Spain, pigs. I mean, Italy had 20 plus percent interest rates. 20 plus… Greece, worse than the whole period where Greece didn't have any interest rates. Couldn't get any. My point is, and they didn't go bankrupt. They just got to where people were real afraid they might. My point is, if we really had a debt problem, you take long term interest rates, go to the roof, that long term interest rates are relatively benign by long term history standards. I mean, where we are with long rates today. This is where we were most of history, where the US was most of history, bounced around, low volatility. Sure. But this is where we were most of history. The rates from 2010 to 2020. Those are abnormally low rates.

What I want you to see is, let me go back to my prior point. Interest payments on federal debt all in, comprise less than 10% of annual federal income. It is the first obligation of the United States government. At those kinds of levels, the government carries the debt easily and has many times before. Am I in favor of having more debt? I didn't say that. Am I in favor of the government borrowing money to spend it on this thing over here? I'm rarely in favor of that. The fact of the matter is, these levels of government debt are not problematic, but the actual amount of dollars is always scary to people. People always just believe that it is there, certain that it is. This is all historically pretty normal where we are and therefore not to be feared.

If that were not the case, interest rates wouldn't be where they are for long term bonds. Long term government bonds. And that's the proof statement to you. So, I'm going to just tell you until you see long term interest rates kick up to some, you know, number like long term government bond rates like 8, 9, 10, 12%. Don't get excited about the debt phobia that you will hear from fear mongers every single year of your life. And that I've heard going back to the days of Barry Goldwater. Thank you very much for listening to me.


Naj Srinivas

That was Ken Fisher answering listener questions as part of his monthly mailbag. Thanks to Ken for sharing his insights with us.

If you want to learn more about the topics discussed today, you can visit the episode page of our website, Fisher You'll find a link to that in the show description. While you’re on our website, you can also subscribe to our weekly digest, which rounds up our latest commentary and delivers it right to your inbox every week. And if you have questions about investing or capital markets that we can cover in a future episode of Market Insights, email us at

We'd love to hear from you, and we'll answer as many questions as we can in a future episode.

Until then, I'm Naj Srinivas. Thanks for tuning in.

Investing in securities involves the risk of loss. Past performance is no guarantee of future returns. The content of this podcast represents the opinions and viewpoints of Fisher Investments and should not be regarded as personal investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis, or reconsideration. Copyright Fisher Investments, 2023.

Total Run Time: 11:16

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