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Illustration: Aïda Amer/Axios

The world's debt is rising to unprecedented levels. While politicians and the general public have seemingly lost interest, capital markets are beginning to show signs of strain, financial experts say.

Driving the news: Global debt surged by $7.5 trillion in the first half of the year, hitting a new record of more than $250 trillion, according to data released Thursday from the Institute of International Finance.

  • The world's debt has now risen to 320% of what it produces, the highest level recorded — and IIF economists say they see "no sign of a slowdown."
  • They expect the global debt load to exceed $255 trillion by the end of the year.
  • The U.S. budget deficit rose 34% in October from a year earlier, and the U.S. and China are leading the debt binge with more than 60% of the world's total, IIF notes.

What's happening: It’s all starting to add up, experts say.

  • U.S. government debt auctions this year have been strained.
  • The systemically important repo market that banks use for cash buckled in September, necessitating hundreds of billions of dollars of cash infusions from the Fed.
  • The government is exploring reintroducing 50- and 100-year bonds to alleviate stress in the debt markets.

Threat level: While these are hardly mainstream economic indicators, the recent troubles in U.S. capital markets "may be an early warning of a digestion problem," Catherine L. Mann, global chief economist at Citi, said during last month's National Association for Business Economics meeting.

The big picture: "This is the longest expansion in history, but it is also the weakest and part of that is the extremely high debt," Liz Ann Sonders, chief investment strategist at Charles Schwab, tells Axios.

  • "The effect may be a subtle crisis over time, like we have seen with just a depressing pressure on growth," she adds.

Be smart: Even Fed chair Jerome Powell, who has been consistently upbeat and focused almost exclusively on the strengths of the U.S. economy, was dour in his assessment of current U.S. debt levels.

  • “The federal budget is on an unsustainable path, with high and rising debt,” Powell told the Joint Economic Committee Wednesday. “Over time, this outlook could restrain fiscal policymakers’ willingness or ability to support economic activity during a downturn.”
  • “I remain concerned that high and rising federal debt can, in the longer term, restrain private investment and, thereby, reduce productivity and overall economic growth.”

Go deeper:

Go deeper

Updated 26 mins ago - Politics & Policy

Here come Earmarks 2.0

DeLauro at a hearing in May 2020. Photo: Alex Wong/Getty Images

The House Appropriations Committee is preparing to restore a limited version of earmarks, which give lawmakers power to direct spending to their districts to pay for special projects.

Why it matters: A series of scandals involving members in both parties prompted a moratorium on earmarks in 2011. But Democrats argue it's worth the risk to bring them back because earmarks would increase their leverage to pass critical legislation with a narrow majority, especially infrastructure and spending bills.

Ben Geman, author of Generate
58 mins ago - Energy & Environment

UN says Paris carbon-cutting plans fall far short

Illustration: Sarah Grillo/Axios

Nations' formal emissions-cutting pledges are collectively way too weak to put the world on track to meet the Paris climate deal's temperature-limiting target, a United Nations tally shows.

Driving the news: This morning the UN released an analysis of the most recent nationally determined contributions (NDCs) — that is, countries' medium-term emissions targets submitted under the 2015 pact.

Biden condemns Russian aggression on 7th anniversary of Crimea annexation

Putin giving a speech in Sevastapol, Crimea, in 2020. Photo: Mikhail Svetlov/Getty Images

President Biden reaffirmed U.S. support for the people of Ukraine and vowed to hold Russia accountable for its aggression in a statement on Friday, the 7th anniversary of Russia's 2014 invasion of Crimea.

Why it matters: The statement reflects the aggressive approach Biden is taking to Russia, which he classified on the campaign trail as an "opponent" and "the biggest threat" to U.S. security and alliances.