'There's No Credit Limit, The Bill Never Comes' — Howard Marks Says America's 'Golden Credit Card' Now Costs $1 Trillion in Interest, More Than Defense

Picture a credit card with no limit, no statement and an interest rate so low it barely registers. Now hand it to someone who never stops swiping, even as long-term borrowing costs keep climbing.

Billionaire Oaktree Capital Management co-chair Howard Marks says that describes the U.S. right now, and the swiping has gotten expensive.

“The U.S. displays a total lack of fiscal discipline,” Marks wrote in a Sept. 22 memo to Oaktree clients. “Thanks to the dollar’s position as the world’s reserve currency, the U.S. has had what I call a ‘golden credit card’ on which there’s no credit limit, the bill never comes, and the interest rate is extremely low. But it uses the card unwisely.”

The deficit is running near 6% of gross domestic product with unemployment at just 4%, Marks wrote. He called that an extraordinarily high level for a prosperous economy. He also pointed out that federal debt had just hit $40 trillion.

The Bill Showed Up Anyway

Marks wrote that net interest was on track to top $1 trillion this year, more than the defense budget. The final numbers backed him up.

Net interest hit $1.05 trillion in fiscal 2026, which ended Sept. 30, and topped national defense spending, according to the U.S. Treasury Department. The full-year deficit came to $1.99 trillion.

Marks wrote that economist John Maynard Keynes backed deficits during slowdowns, with the debt repaid once growth returned. Washington is doing the first part and skipping the second.

“Today, the U.S. is incurring massive deficits during prosperity, and we hear no talk of balanced budgets,” Marks wrote.

What Happens When The Card Gets Declined

“This profligacy raises the possibility that the credit card may be taken away or at least be limited in some way,” Marks wrote. “The immediate consequence would be higher interest rates on U.S. debt.”

Higher rates would push the interest bill and the deficit even higher, Marks wrote, and keep the negative spiral going. Higher long-term rates also hit Main Street. He wrote that they can slow economic growth and make cars and houses less affordable.

The memo came after the Treasury said on Aug. 19 that it would double the maximum size of its long-dated bond buybacks, from $2 billion to $4 billion per operation. Two days earlier, the 30-year Treasury yield had closed above 5.3%, a 19-year high. Marks wrote that the buybacks make the rate picture look better without fixing the problem underneath.

“Forcing rates down by buying bonds is like a doctor applying an ice pack to a patient with a fever,” he wrote.

Marks doesn’t expect a default. “I don’t think there’s a serious probability the U.S. will fail to repay debt as scheduled,” he wrote. The bigger risk, in his view, is the “debasement trade,” where debts get paid back in dollars that buy less.

Don’t Torch The Stock Portfolio Just Yet

When a friend asked whether he should sell his stocks, Marks wrote, “That’s not the answer, I told him.”

“The problem we face isn’t a problem with the U.S. stock market or with U.S. companies,” he wrote.

Marks wrote that dumping stocks for dollar cash, money markets or bonds still leaves investors holding dollars. Switching currencies doesn’t solve it either. “If you move out of dollar assets and into another currency that’s subject to debasement, what have you accomplished?” he wrote.

His fix is a change in behavior, not a market trick. He wants Washington to stop promising to pay off the debt, raise more revenue as a share of the economy, keep spending growth below economic growth and save the gains from higher productivity instead of spending them.

“You can’t ignore the laws of economics and expect to come out ahead,” Marks wrote.

Nobody gets declined at the register until the day it happens. The dollar is still the world’s reserve currency, so the card still works. But Marks’ memo makes the point that even a card with no limit has a bill, and right now it comes to about $1.05 trillion a year.

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