A First World Debt Crisis!?

It's not only the USA, most large first world economies' governments are running deficits amounting to several percentage of GDP. From a bondmarket perspective, it's a conundrum why economists think that long term interest rates are 'artificially' pushed too low. Why, first world governments are holding rates up by flooding the markets with bonds. According to the Financial Times,
Standard & Poor's says if fiscal trends prevail, the cost of ageing populations will fuel downgrades of France, the US, Germany and the UK from investment grade to speculative, or junk, category France by the early 2020s, the US and Germany before 2030 and the UK before 2035.
Even though the buyers of these bonds might look irrational from this perspective, the first world governments sure do not. As long as they can bring large volumes of debt that is still top rated (AAA) to the market at high prices, they should. And they do. At least as long as they could find good use for the money raised. Let's hope they will...

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