The Macro Minute: Can the US grow its way out of the “debt disease” if politics slow AI development?

The U.S. faces a structural inability to outgrow its debt burden, particularly if political interference hampers AI development. Federal fiscal dynamics are currently on an unsustainable trajectory, with "true interest expense"—encompassing Medicare, national defense, net interest, and Social Security—growing 50% faster than tax receipts. This imbalance, coupled with a lack of political will for fiscal reform, points toward a high probability of a U.S. fiscal crisis by 2030. Bond market demand is failing to keep pace with accelerating supply, creating a natural upward bias on yields. Future stability likely depends on forced absorption of sovereign debt by the commercial banking sector through regulatory easing, such as adjustments to the Supplementary Leverage Ratio. Absent such intervention, the market faces a "paradigm D" scenario characterized by default via currency debasement.