Ross Gerber Says Bad US Policy Will Cost the U.S. Hundreds of Billions in Extra Interest as Bond Yields Keep Climbing
U.S. government borrowing costs are climbing to levels not seen in nearly two decades, and Gerber Kawasaki Wealth Management CEO Ross Gerber says Washington’s policies are making an already serious debt problem even worse.
With Treasury yields surging and federal debt already exceeding $40 trillion, he warns that the country could face hundreds of billions of dollars in additional interest payments.
“Yields just go higher and higher as bad US policy is going to cost America hundreds of billions in extra interest costs,” Gerber wrote on X on Wednesday.
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Treasury Yields Hit Multidecade Highs
Gerber also pointed to the sharp increase in borrowing costs, writing that the “10yr treasury [was] at 5.11% and on a relentless drive upward.” He added, “This is up from 4% a year ago.”
The sell-off in government bonds continued Thursday as investors increasingly bet on another interest rate hike from the Federal Reserve.
The benchmark 10-year Treasury yield jumped more than 10 basis points to 5.223%, its highest level since June 2007. The 30-year yield reached 5.501%, a level not seen since June 2004, while the two-year yield rose to 4.941%.
Higher Treasury yields mean the government must pay more to borrow money when it issues new debt or refinances existing obligations. They can also push up mortgage rates, making it more expensive for Americans to buy homes.
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A Potential Debt Spiral
Gerber argued that rising borrowing costs are becoming a much bigger problem because of the country’s enormous debt and what he considers damaging trade and foreign policies.
“Fiscal deficits and our massive $40 trillion of debt has become a national security issue under this administration,” he wrote on X on Thursday.
He also added that foreign governments are increasingly unwilling to finance U.S. debt because of the administration’s trade policies and diplomatic relationships.
“We have no allies anymore,” he said, “no foreign governments want our debt or will finance America due to errant policies on trade and basically crappy diplomacy.”
In another post that day, Gerber warned that investors have plenty of alternatives to government bonds and that existing bondholders have suffered significant losses as yields have risen, as “America can’t afford a 5% Treasury bond for long without creating a debt spiral.”
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