Watchdog Sounds Alarm On US Debt's Trajectory As BlackRock's Larry Fink Warns 'The Situation is More Urgent Than I Can Ever Remember'

With the U.S. national debt approaching $35 trillion, it's not the size of the number as much as it is the pace of the increase that's of most concern to experts. 

Congress's independent fiscal watchdog, the Congressional Budget Office, warns the U.S. fiscal debt growth is "unprecedented," risking a possible crisis reminiscent of one impacting a U.S. ally just 18 months ago.

Former United Kingdom Prime Minister Liz Truss's government issued more debt to fund tax cuts, which led to soaring borrowing costs and a dramatic intervention by the Bank of England pledging to buy bonds at "whatever scale is necessary." Truss was forced to resign 45 days after taking office largely because of market chaos.

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Blackrock Inc. CEO Larry Fink is one person expressing dismay at the pace U.S. government debt is rising, saying that "the situation is more urgent than I can ever remember" and that "there's a bad scenario where the American economy starts looking like Japan's in the late 1990s and early 2000s, when debt exceeded GDP [gross domestic product] and led to periods of austerity and stagnation."

For context, the U.S. debt is rising by $1 trillion every 100 days, and neither leading presidential candidate seems focused on tackling the issue this election cycle.

"Neither is talking about fiscal rectitude and [Trump] is actually talking about extending tax cuts," said David Page, head of macroeconomic research at Axa Investment Managers.

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Rating agencies have started to provide warnings about the state of America's debt.

Fitch recently downgraded the U.S. government's debt rating by one notch from its perfect AAA grade, joining Standard & Poor's, which lowered its rating for American debt in 2011. 

Meanwhile, Moody's, the last of the three major rating agencies to still give America a perfect rating, recently shifted its rating outlook to negative, citing declining fiscal stability.

For investors concerned about reckless government spending, hard assets such as gold could make sense. Investors not seeking to own physical gold can instead opt for an exchange-traded fund (ETF) tracking the metal, such as the SPDR Gold Trust GLD, which is already up about 7% year to date. 

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