On Wednesday, eastern usa time, top bankers from the International Institute of Finance (IIF) warned that under Trump's leadership, the usa national debt is about to "explode in growth."

US debt is set to increase significantly.

The International Institute of Finance, headquartered in Washington, is the most influential global financial industry association. Analysts from the Institute stated that incoming President Trump plans to cut taxes without cutting spending. This will raise US national debt from the current level of about 100% of GDP to over 135% in the next 10 years.

With Trump increasing spending and imposing tariffs on foreign goods, raising the prices of imported goods, US inflation may also rise.

Currently, the size of the US national debt is close to $36 trillion. The International Institute of Finance warns that if the costs of Trump's tax cuts exceed expectations, US national debt could reach over 150% of GDP.

Markets are already anticipating a significant increase in US debt, so the yield on 30-year US treasuries has risen from below 4% in September to over 4.5% today.

The International Institute of Finance stated: "Recently, the yield on 30-year US treasuries has soared, which particularly indicates that investors are concerned about the sustainability of the expanding debt burden and the possibility of inflation increasing with greater fiscal pressures."

Inflation may resurge.

Trump's plan to exempt Americans' overtime and tip income from taxes. The International Monetary Fund (IMF) states that such policies will stimulate fiscal spending but may also reignite inflation.

During his campaign, Trump also mentioned his desire to increase taxes on imported commodities to provide additional revenue for the Treasury Department and potentially boost local manufacturing. However, raising tariffs could make overseas manufactured goods more expensive, exacerbating inflation in the United States.

The International Monetary Fund predicts that this upward pressure on prices may compel the Federal Reserve to abandon its interest rate cut plans, keeping borrowing costs in the United States at higher levels for a longer period.

Analysts state: "The recent rate cuts by the Federal Reserve have consistently been part of the Fed's strategy to support economic growth. However, the fiscal expansion under the leadership of Trump may force the Fed to reconsider this path, especially if inflation risks arise quicker than expected."

Can Musk's DOGE department come up with surprising strategies?

Trump has been appointed.$Tesla (TSLA.US)$CEO Musk has come to lead a newly established department called the "Department of Government Efficiency" (DOGE). This department aims to offset the impact of tax cuts by reducing federal spending. Trump stated in a declaration that the "Department of Government Efficiency" will "pave the way for dismantling government bureaucracy, cutting unnecessary regulatory requirements and wasteful spending, and reorganizing federal institutions."

However, neither Trump nor Musk have yet presented detailed plans on how to cut expenses.

Elon Musk had previously boasted that he could save $2 trillion for the usa government. However, economists doubt the feasibility of this approach.

Paul Mortimer-Lee, an independent economist and researcher at Niesr, pointed out that such massive spending cuts would be equivalent to wiping out the entire budgets of transportation, education, housing, social services, science, and the environment in the USA, and it would also destroy medical insurance and other benefits—this is almost unimaginable.

Editor/Rocky