Fisher Investments' Founder Ken Fisher Debunks: US Debt Fears

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher debunks the myth that the US government is on the brink of a debt crisis. According to Ken, while total (or gross) US debt levels—currently $32 trillion—may sound problematic, the debt number itself is not what matters most. Instead, Ken says what matters most is the carrying cost of our debt relative to the size of our economy and our ability to afford that debt.

Ken believes it is better to focus on net US debt, instead of gross debt, because it excludes the amount owned by the US Federal Reserve and other federal agencies. Ken clarifies that US debt remains affordable, with current interest payments to service US debt hovering around 2% of US GDP—lower than the 1990s when the US debt was widely considered manageable. Ken notes government spending is a concern for many and is certainly something to monitor moving forward, but current US debt levels are unlikely to negatively impact economic activity or stock prices anytime soon.

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Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice.