Tag: debt

Canada’s government debt projected to hit $2.44 trillion, nearly double since 2007: Fraser Institute

Canada’s combined federal and provincial government debt is projected to nearly double from pre-2008 financial crisis levels, reaching an estimated $2.44 trillion, according to a new report from the Fraser Institute.

The report, titled The Growing Debt Burden for Canadians: 2025 Edition, says combined government net debt has ballooned from roughly $1.21 trillion in 2007/08 to more than $2.3 trillion today, with debt continuing to climb. 

Researchers warn that the debt load is growing faster than the economy itself. The combined federal-provincial debt-to-GDP ratio has risen from 53.2 percent in 2007/08 to nearly 75 percent.

“Government debt — federally and in most provinces — has grown substantially over the past 17 years,” said Fraser Institute fiscal studies director Jake Fuss, co-author of the report. 

The report measures “net debt,” meaning total government liabilities minus financial assets held by governments. The study argues that persistent deficits today will translate into higher taxes and higher debt servicing costs in the future. 

Debt interest payments are already becoming a major expense. Another Fraser Institute study estimates federal and provincial governments will spend a combined $92.5 billion on debt interest payments in 2024/25 alone. 

On a per-person basis, the combined debt burden varies widely across the country. Alberta has the lowest combined debt per person at roughly $40,939, while Newfoundland and Labrador has the highest at nearly $68,861 per resident. Quebec and Ontario also rank among the most indebted provinces per capita.

The Fraser Institute describes itself as an independent, non-partisan public policy think tank.

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Illinois Plans Tax Break for Billionaires and the Chicago Bears. Everyone Else Could End Up Paying More.

The Illinois Legislature is busy advancing a bill that’s one of the most egregious examples yet of the grift between professional sports teams and state and local governments. 

Under House Bill 910, projects designated as “megaprojects” would have their assessed value frozen at a base-year level, effectively shielding all new construction from property taxation for up to 45 years. Just two developments would qualify for the maximum duration under the current language: the proposed Chicago Bears stadium in Arlington Heights and the One Central mixed-use development near Soldier Field in Chicago.

Rank-and-file property owners in Illinois pay the highest property taxes in the nation, but middle-class taxpayers get no relief under the bill. Instead, it’s likely their taxes will go up even more. The language says “megaproject” developers (for projects that cost at least $100 million) would be able to negotiate a payment in lieu of taxes with local taxing bodies, with the duration of the tax break varying by the total cost of the development. For example, if a property tax analysis of the Arlington Heights stadium estimates it to be a $5 billion development on land currently valued at $100 million, this bill would reduce the developer’s annual tax liability from roughly $350 million to approximately $7 million.

What happens to the difference of $343 million in this example? Local governments can still count the full value of the megaproject when calculating how much they’re allowed to tax and borrow—they just can’t actually collect taxes on most of the megaproject. Given the record of local governments in Illinois, it’s a pretty good bet they’ll find that revenue elsewhere by raising taxes. The legislation, as it stands, does basically nothing to address this.

The bill passed the Illinois House in April. The bill passed 78–32, with 10 Republicans crossing party lines to support it. Democratic Gov. J.B. Pritzker is busy pressuring the state Senate to get it across the finish line before the end of May. Pritzker (and the rest of the Legislature) are feeling pressure to pass the bill due to the looming threat of the Bears moving to northwest Indiana. Hoosier lawmakers, especially Republicans, have a standing offer for the Bears to relocate just across the state line for over $1 billion in public subsidies. (At least Indiana is in better fiscal health than Illinois.)

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The Bond Market Is About To Break Washington

The bond market is beginning to force reality onto Washington, and it may ultimately force an end to the Iran war long before politicians or diplomats are willing to admit it.

For months, investors have focused on missiles, retaliation headlines, oil chokepoints, and the possibility of a broader regional escalation from the Iran War. During the geopolitical noise, I urged readers not to overlook stress in financial markets that was happening before the war even started, namely in places like private credit and subprime auto lending. I called these “real crises” hiding behind record highs while “investors” chase gamma squeezes higher in an ongoing distortion feedback loop that is making things look far better than they are under the surface.

And now, beneath all the geopolitical noise, a much more serious, harder to ignore crisis is unfolding. As Cypher says in The Matrix: 

“Fasten your seat belt Dorothy, ’cause Kansas is going bye-bye.”

This crisis is in the Treasury market. Bond yields are moving sharply higher, and they are sending a message that policymakers can no longer afford to ignore: the financial system is becoming unstable under the weight of war spending, massive deficits, persistent inflation, and a debt load that was already unsustainable before this conflict began.

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Mamdani’s ‘Balanced Budget’ Is an Accounting Atrocity

In mid-May, after extending the executive deadline, New York City Mayor Zohran Mamdani released his $124.7 billion Fiscal Year (FY) 2027 Executive Budget. 

After warning that NYC faces a budget crisis of “historic magnitude” in late April, Mamdani now assures the 8.5 million residents of the Big Apple that the city is on “firm financial footing” after he “balanced the budget” “without raising property taxes” or “slashing services.”

While it is certainly true that Mamdani did not slash services or raise property taxes even higher than they already are, it is ludicrous for him to declare that NYC’s budget is sound and sustainable.

Aside from Mamdani’s smoke-and-mirrors budget summary, the harsh reality is that the Big Apple is bankrupt. 

According to NYC Comptroller Mark Levine, the “$2.2 billion budget shortfall for FY2026 and projected $10.4 billion gap for FY2027… is the first time since the Great Recession that the City faces a budget shortfall of this magnitude.”

Based on Mamdani’s “balanced budget,” the FY 2026 and FY 2027 deficits are no longer a concern. 

Much of the gap has been taken care of by what Mamdani calls a “partnership with Albany.” New Yorkers outside of the Big Apple call it a bailout.

“Thanks to Governor Kathy Hochul, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie, the City secured an additional $4 billion in state support and actions to help stabilize the budget,” Mamdani bluntly put it.

However, Albany could not supply enough money to make the short-term math work.

Thus, Mamdani’s balanced budget relies upon accounting gimmicks and “new tax revenue.”

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Causes of Uncontrollable US Public Spending and Debt

Annual US public spending has been in deficit for decades. As a result, total US debt continues to increase year after year with no end in sight. The end may not be in sight but the debt cannot continue to grow forever. We just don’t know when markets will shed the dollar, although the process may already be underway. In this brief essay, I will not point out all the disastrous consequences except that they are disastrous and will happen. Rather, I will point out how we got to this sorry state of affairs when it appears that other nations, such as China and Russia, have done a much better job of controlling public spending.

Gold Standard Takes the Blame

The main, and most obvious, reason that American spending has been in chronic deficit is that it abandoned the gold standard and appears to have no intention of reinstating it. Such is not the case with China and Russia. True, neither country is on the gold standard now, but both have been quietly accumulating gold for many years. Nor has either announced their respective total gold holdings or when and under what circumstances either would be prompted to tie their currencies to gold. Nevertheless, it is clear that both nations have a greater respect for gold than the US and appear to be preparing for its return at least for settling international trade accounts.

For millennia gold, and occasionally silver, were considered to be true money. Nations did go off the gold standard in time of war, but most quickly returned to a gold standard after the end of exceptionally high military spending. All nations, except the US, went off the gold standard in World War I, but eventually returned. The British returned to a gold standard in the 1920’s, but the monetary authorities made a glaring mistake. The British had increased the money supply by approximately double during the war, which made it almost impossible to return at the pre-war pound-to-gold ratio, but they did it anyway. This caused a severe recession in Great Britain as it required a drop in prices of 50 percent.

Labor contracts could not be honored and strikes ensued. Gold flowed out of the country, which Fed Chairman Benjamin Strong tried to ameliorate by inflating the dollar surreptitiously. This was but one factor that caused the US stock market crash and led to a sharp recession. Instead of ceasing monetary intervention and allowing business and prices to adjust, as was the policy of President Harding after WWI, first Hoover and then Roosevelt tried to cartelize the economy via price controls. The Great Depression followed. The gold standard took the blame for this debacle instead of Hoover/Roosevelt. In fact, it is a very common myth that Roosevelt’s New Deal saved America. Such is economic ignorance perpetuated.

Corrupting the People through Welfare

Secondly, in a gradual process, government became responsible for the people’s welfare, displacing the family and local friendly societies. The first large program was Social Security, truly the camel’s nose under the tent. Roosevelt sold the program to the citizens and to Congress using different rationales. To the public he claimed that the program was no different than a private annuity. The government took the people’s forced contributions, deposited them into earmarked accounts, and then distributed them plus interest to taxpayers upon reaching a certain age. Of course, the US Constitution enumerates no power to Congress to run a forced annuity program. So Congress and Roosevelt sold the program as merely a spending program, one of many. Social Security was never intended to replace the individual as primarily responsible for his own retirement income. It was sold as a supplement. Yet today 22 million Americans retire with no income stream except Social Security. This represents almost 40 percent of retirees. Obviously, the concept of moral hazard is unknown to government.

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China Off-Balance-Sheet Debt Exceeds GDP of Most Nations

For decades, there have been claims that China had the fastest-growing economy, and that it would eventually overtake the U.S. as the world’s largest economy. However, the fastest-growing economies are always developing economies because mature economies do not have as much room to grow.

In other words, a country with a per-capita GDP of $80 per month, as China had in the year 2000, has far more room for rapid expansion than a country like the United States, where the figure now stands at around $7,000 per month.

There is also the concept of low-hanging fruit. When a country has no highways or rail infrastructure, building highways and railways causes GDP to skyrocket. But once all major cities are connected, building additional highways and rail lines has only a marginal impact on economic growth.

A case in point is China’s famous high-speed rail system. Once highways and conventional railways already existed in China, converting to high-speed rail represented a massive economic investment and a large accumulation of debt, while the resulting increase in GDP was relatively minimal. For one thing, high-speed rail cannot be used to carry freight.

While China is still building high-speed rail lines, linking small communities with other small communities, the world is moving toward a remote-work model, making the movement of people a smaller contributor to GDP. Moving freight, however, remains critically important. Despite having a population less than one-quarter the size of China’s, the United States operates approximately 220,000 kilometers of total rail, about 33 percent more than China’s 162,000 kilometers, the vast majority of which is dedicated to freight.

Along with this development boom in China came debt. Because of the centrally planned economy, the central government was able to order local governments to invest and develop by creating debt. That debt was financed largely through real-estate sales, as the Chinese government controls actual land ownership rather than simple lease arrangements, which is what individual “homeowners” in China actually possess.

In order to keep this debt from detracting from the appearance of investment and economic performance, large portions of the debt were kept off the balance sheet.

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Japanese Are Feeling the Economy Collapse in Real-Time

Japan spent decades trying to convince the world that endless debt, money printing, and zero interest rates could continue indefinitely without consequences. Now ordinary Japanese citizens are beginning to feel the pressure directly as inflation rises, wages fail to keep pace, and living standards steadily deteriorate underneath the surface.

For the first time in generations, Japanese households are experiencing sustained cost-of-living stress while confidence in economic stability weakens sharply. Recent polling showed more than 80% of Japanese households now believe prices are rising faster than their incomes, while consumer confidence remains near recessionary levels despite years of government stimulus and intervention. Food inflation, utility costs, transportation expenses, and housing-related costs have all risen materially as the yen weakened dramatically against the dollar over recent years.

The psychological impact inside Japan is enormous because the country spent decades living through deflationary conditions where prices remained relatively stable. Japanese consumers became accustomed to stagnant prices and low borrowing costs. Once inflation finally arrived, the shock to household budgets was immediate.

Rice prices alone surged more than 20% year-over-year at one stage while basic food staples, imported goods, fuel, and electricity all moved sharply higher. Japan imports enormous quantities of energy and raw materials, which means yen weakness translates directly into higher consumer prices across much of the economy.

This is exactly what I warned would eventually happen once central banks lose control of sovereign debt cycles.

Japan now carries government debt exceeding 260% of GDP, the highest among major industrial economies. For years the Bank of Japan artificially suppressed interest rates and monetized government debt through massive bond purchases. The BOJ effectively became trapped because allowing rates to normalize aggressively would destabilize the government’s own financing structure.

Now Japan faces the consequences of that trap.

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U.S. Treasury pays $3 billion a day in interest on national debt nearing $39 trillion mark

The U.S. Treasury has paid $628 billion in net interest this year to service its borrowing, according to the the Congressional Budget Office (CBO).

The latest monthly budget update on the national debt and its interest burden, shared on May 8, breaks down the government’s income and outgoings for the fiscal year so far, which began in October.

The CBO breakdown shows the deficit so far this year is actually smaller than it was for the same period a year prior. However, every day the Treasury is still forking out billions of dollars to manage existing service payments to lenders.

The report demonstrates the government’s largest outlays: $953 billion so far this year for Social Security benefits, $588 billion for Medicare, and $409 billion for Medicaid. Net interest on public debt is a larger figure than both Medicare and Medicaid, totaling $628 billion for the seven months between October and April.

On those numbers, for the 212 days since October, the Treasury’s interest payments have averaged at just shy of $3 billion a day—$2.96 billion to be precise.

The interest payment figure is rising with every budget update that passes, the CBO said: “Outlays for net interest on the public debt rose by $41 billion (or 7%) because the debt was larger than it was in the first seven months of fiscal year 2025 and because of higher long-term interest rates. Declines in short-term interest rates partially mitigated the overall rise in interest payments.”

The overall debt picture has marginally improved: The April update shows government income totaled $3.3 trillion for the fiscal year so far, up from $3.1 trillion for October to April of 2025. Outlays have also increased, from $4.2 trillion to $4.3 trillion, meaning the deficit for FY26 stands at $955 billion, which is $94 billion less than for the same period in FY25.

A significant driver in this change was the revenue generated by Trump’s tariff agenda, intended to rebalance trade deals with every nation on the planet.

While geopolitical fallout and a level of market volatility followed, the income generated by the policy was significant: A 220% uplift in duties revenue compared to the previous year. In FY25 (between October and April), customs duties totaled $59 billion, but for the same period this year, the government has raked in $190 billion.

It’s the reason Wharton Professor Joao Gomes previously argued that the initially unpopular tariffs are here to stay—even if the Democrats win the next election. “The truth is governments need revenues and once you see the amount of revenue the tariffs bring, I think Democrats will be addicted to them as Republicans—or are as likely to be,” he told Wharton Business Daily last year.

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Europe Explores Wealth Taxes, Capital Taxes, and Exit Taxes

The European Commission has now openly published a two-volume study examining “net wealth taxes,” “capital taxes,” and perhaps most alarming of all, “exit taxes.” They are no longer hiding the agenda behind slogans about “fairness” or “solidarity.” The report openly discusses how to tax wealth, how to monitor ownership, how to close compliance gaps, and how to prevent capital from escaping. This is precisely what I have warned was coming as governments across Europe enter the terminal phase of a sovereign debt crisis.

The study was commissioned by the European Commission’s Directorate-General for Taxation and Customs Union and examines wealth taxation systems across Europe and beyond, including France, Germany, Spain, Norway, Switzerland, and Colombia. The report specifically focuses on recurring wealth taxes, inheritance taxes, capital gains taxes, and exit taxes designed to capture wealth before individuals relocate outside the jurisdiction.

The timing is everything. Europe’s economy is collapsing into what our Economic Confidence Model has projected would become a prolonged depressionary period into 2028. Manufacturing across Germany has been imploding, energy prices remain structurally elevated because of the self-inflicted sanctions war and Net Zero agenda, and capital has been fleeing Europe into the United States for years. The EU knows this. They see the money leaving. They understand that confidence in European governments is collapsing, and instead of reforming policy, they are moving toward containment.

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US National Debt Exceeds Size of Economy for 1st Time Since End of World War II – Reports

The US national debt exceeded the size of the country’s economy at the end of March for the first time since the end of World War II, Fox Business reported, citing data released by the Bureau of Economic Analysis.

The Bureau reportedly estimated on Thursday that the national debt held by public amounted to $31.27 trillion as of March 31. GDP at that time was estimated at $31.22 trillion, meaning the US national debt exceeded 100% of the country’s economy.

Last time such a situation was observed in 1946, when the percentage of public debt to GDP was 106%, the report read.

On Thursday, Fitch Ratings suggested that US national debt, under its baseline scenario, would exceed 120% of GDP no later than 2027. The US public debt-to-GDP ratio was 116.6% in 2025, will reach 119.3% this year, and will increase to 122.2% in 2027, the agency estimated.

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