U.S. debt hits 40T sparks stock market concerns

The article addresses the risks associated with the rising U.S. government debt, which has surpassed $40 trillion, and its impact on the stock market and the economy over the next decade. It suggests that the government may resort to inflation to reduce the real value of its debts, leading to a gradual erosion of the real returns on stocks and long-term bonds. This process does not necessarily result in a sharp crash but rather a slow decline in the purchasing power of investment portfolios over up to ten years, similar to what occurred between 1966 and 1981. Experts warn that persistent inflation diminishes the ability of long-term bonds to safeguard portfolios, and they recommend focusing on short- and medium-term bonds, inflation-protected securities, and tangible assets such as gold, natural resources, and growth-oriented stocks as means to achieve better returns amid an escalating inflationary environment.

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