Why Mortgage Rates Could “Spiral” From Here

Dave:
The US just crossed a threshold that we haven’t seen since 1946, and it’s not a milestone we should be particularly proud of. Our national debt just surpassed our total gross domestic product. And the last time this happened was right after five years of fighting a world war. As of last week, we’re at that point again. But what is the cause this time? Why has our debt ballooned so much in recent decades and does it even matter? We keep hearing the debt is going up, but by many measures, the economy is still resilient. Certainly, there hasn’t been any crises in recent years, but debt does matter. And if we stay on this path, our debt could be a drag on our economy and the housing market for decades to come. So today on the market, we’re going deep into the issue of our national debt. How we got here, what the recent data shows, what could happen next, and what it all means for real estate investors.
Hey, everyone. Welcome to On The Market. I’m Dave Meyer, chief investment officer at BiggerPockets. Today on the show, we’re digging into an issue that everyone is surely aware of, our massive national debt, but not many people fully understand, or at least understand fully why it’s so large, what the current trajectory is, and what could happen to the economy and to the housing market if our debt keeps growing. We’re doing this now today. We’re going to dive into this because last week we hit this milestone with our debt. Our debt total is now $31.27 trillion. And our GDP, in other words, the total size of our economy is $31.22 trillion, so slightly lower, but our debt is now bigger than the entire economy in one year. And it’s not like this milestone in particular, like crossing this particular threshold triggers anything imminent in the economy, but it’s a reminder that our debt is absolutely not under control.
It’s getting worse and potential implications keep getting larger. So today I’m going to break it all down, the recent history of our debt, why it’s so large, why it keeps growing, and what it means for you, for me, and the entire global economy. This is an important topic you really should understand even though a crisis might not be tomorrow. The stakes are high here, and I want you all to understand what those stakes are. And I think after today’s episode, you will. One more thing before we get into this, I got to ask you all for something. I am honestly terrible at asking for reviews, but today I actually remembered. So if you’re a frequent listener of the show or if you really like this episode, please give us a like on YouTube, subscribe on YouTube so you can hear more. Or if you’re feeling extra generous, leave us a review on Apple or Spotify.
It really does mean a lot to us. So with that, let’s get into our conversation about debt and we’re going to start with the big picture. Why? Why is our national debt so big? We’ve always had debt in the United States, actually goes all the way back to the Constitution 1789. There were a couple of years there where Andrew Jackson started to shake things up a little bit and we didn’t have any debt for a little bit, but we’ve pretty much always had debt as long as we’ve had a country. And debt is not necessarily a bad thing, right? A lot of economists argue that increasing government spending spurs the economy, and there is evidence to back that up. And as real estate investors, I think we all sort of get this, right? We know that there are good applications of debt and there are dangerous applications of debt.
And a lot of the history of the United States, we’ve accumulated debt during very important critical moments for the country. Like winning World War II. For example, the last time our debt to GDP ratio was as high as it is now right after World War II, I think most people would argue good use of debt, right? Worth doing it. So as you can see, it’s not necessarily always a bad thing, but we’ll get back to this idea of good debt, bad debt in a little bit. Let’s just stick with the history here for a minute. For the most part, debt in the United States has come around either wars or crises. So if you look back at the big spikes in national debt, you see the Revolutionary War, the war of 1812, the Civil War, World War I, World War II, or things like the Great Depression where the government spent a lot of money during the New Deal to try and get us out of the Depression.
All of that stuff drove debt, but after those crises were over, after those wars were over, usually the deficit receded and we would reduce our overall debt during the quote unquote normal times. However, since about 1980, we’ve entered a different era where we basically have structural deficits built in to the budget for the government. Basically, that means we operate at a loss every single year. And I want to clarify sort of two terms that I’m going to be using a lot in this episode. The first is the total debt, which is what I’ve been referring to so far, which is the $37 trillion of aggregated debt that this country has built up over its lifetime, 37 trillion total debt. Then there’s a deficit or a surplus. That’s basically what happens in a given year. So if I say that the deficits went down after the war, that means that maybe in the following year in 1947, we collected more tax revenue than we spent that year, but the total national debt was still positive.
We still had debt even though that year we were making money as a government instead of taking a loss with the deficit, right? Hopefully that makes sense. Okay. So now let’s just hone in on this situation from basically 1980 till now, because that’s when things really change. You can look this up. I will throw the chart here for anyone who’s watching on YouTube, but basically you could see for most of US history, the debt grew, but it wasn’t exponential growth. Then starting in 1980, things just really started to take off. And then since about 2005, things have gotten even crazier. So back in 1980, total US debt was about $863 billion. Again, today, 37 trillion. Now that might not sound like a big difference because we have gotten very used to in this country throwing around huge numbers. Oh, in COVID, we printed $2 trillion or this new project and football stadium cost $10 billion.
These sound all like huge numbers, but the difference between about 900 billion in 1980 and 37 trillion is enormous. That is 40 times higher. Just to throw that out here, that is 4,000% growth in debt that this country has taken on since 1980. Now, if you adjust that for inflation, which you should, because that’s the right way to do this analysis, it would be about 11 times higher. So our debt has grown 11X in 46 years, and you might be thinking, well, that’s okay because GDP has grown, our economy has grown, and that’s true, but compare that 1100% growth in our debt since 1980 to GDP of just 230%, right? That is not that much. I mean, 230% growth in GDP is solid, but our debt grew 1100% during the same time. Back in 1980, our debt was 35% of the economy of GDP. Today, it just surpassed 100%.
So what the heck happened here? What happened since 1980 that has caused the debt to take this completely different trajectory than it was on for basically 200 years. Now there are four sort of big picture buckets that I’m going to sort these things into that you should pay attention to. Number one is sort of these things that we call mandatory spending. These are big, huge government programs where the spending is “non-discretionary.” The bills and the laws that enacted them require these things to grow over time regardless of tax income. So these are things like Social Security, Medicare, and Medicaid, and the expenses for those things are going up a lot. This is really a significant portion of why our spending is so high, is because first and foremost, we have boomers as a huge generation. They need that healthcare and they are drawing on instead of contributing to Social Security and there are a ton of them.
We are also seeing people live a lot longer. So the number of years that they draw Social Security or they draw healthcare that’s subsidized by the government is longer. So that is a major bucket here. And this spending is actually projected to keep growing, even though we know Social Security is not even fully funded past 20, 35. So we’ll see what happens there, but it is projected to keep growing. Another giant piece and growing piece of mandatory spending is just interest, right? The US government has debt. We all know this. You have a mortgage, you have to pay that every month, right? The US government has to pay the people who have lent it money in the form of bonds and treasury bills back. And so right now, actually, if you look at our national budget, 14 cents of every dollar the federal government spends goes to just paying interest.
That’s not services, that’s not defense, that’s not social security, it’s just paying interest. And again, that’s got to get paid. That is really big. So those are two large spending areas that are really non-discretionary, right?That’s one of the reasons that we’ll get more into this that things haven’t changed is because these are just huge buckets that can’t really change, at least unless there’s a huge overhaul in our entire federal budget, which is possible, hasn’t happened. The third bucket after these required spending is just tax cuts. Since 1980 and Ronald Reagan, tax rates have just come down a lot. Reagan cut top tax rate from 70% to 28%. We’ve had two big tax cuts with President Trump in 2017 and 2025. And although there is some theory, or a lot of these tax cuts are proposed as not reducing tax revenue because we will grow our way out of that, there’s actually just not any evidence of that, that tax cuts are stimulating the economy enough to offset the potential loss in revenue.
Reagan himself grew the deficit 186%. Part of that was tax cuts. Part of it was because he increased the defense budget by 30%, but we didn’t grow our way out of it when he cut taxes in the 1980s. And as you’ll see, there’s a trend here throughout this episode, it is not just tax cuts or those spending increase. It’s a combination of both. So the last bucket, and just as a reminder, we had mandatory spending in the terms of social security, Medicare, Medicaid, we have interest payments, we have tax cuts. And the last thing that’s really changed since 1980 is that we’re no longer running a deficit only during crises. We’ve just basically continued to do this forever. That’s just a political shift that’s happened. We used to pay off the debt from a war or a financial crisis. Now we just keep spending. We’ve seen between George W.
Bush and Barack Obama during the financial crisis, government increased spending took on a lot of debt to stimulate the economy, get out of that crisis. That’s a normal reaction to that, but budgets didn’t really fall after that. We’ve just kept spending for the last 18 years after that. And so the debt just keeps getting bigger. Rather than using debt and using government spending to help during times of national need, this has become the defacto. And so these four things together, these increases in mandatory spending, reduced revenue through tax cuts, and just this political shift where people don’t feel like we need to balance the budget anymore. That’s why the debt keeps growing. And yeah, that’s why we have these huge deficits since 1980. And I just want to call out, I don’t want to make this overly political. And I know a lot of this can get political, but I just want to state a fact here.
And you can look this up if you want to. Both parties do this. It is both Republicans and Democrats since 1980 who have contributed to this massive debt. The only president in the last 46 years to have a surplus was Bill Clinton, who ran a surplus from 1996 to 2000. The deficit has increased under every other president. Reagan added almost $2 trillion to the deficit, almost 200% growth at that time. George H. W. Bush added 1.6 trillion. Like I said, Clinton ran a surplus for at least half of his presidency, debt to GDP fell for a time, only time in the last 50 years, but then since 2000, things have gotten really wild. George W. Bush surplus went to almost $6 trillion in eight years. Obama over $8 trillion in eight years. Trump’s first term, $8 trillion in only four years. Biden, $7 trillion in just four years.
And Trump’s second presidency, we’ll see. But this year alone, we’re already in May. We’ve already contributed over $1 trillion to this point in the year. The One Big Beautiful Bill Act is projected by nonpartisan analysts to add $5 trillion to the deficit. And as of right now, we are adding $1 trillion to our deficit every 100 days. That is wild. It has been basically nonstop for 26 years. Some people blame too much spending. Some people blame lower taxes, but it’s the combination. Tax cuts without spending cuts haven’t worked. And let’s be honest, neither party is cutting spending. We heard Doj was going to do it, right? That was a failure. The deficit has grown a lot since that happened. Dog claimed they have cut $100 billion in savings. If you look at independent analyses of how much was actually saved, it was close to two billion, right?
So big discrepancies there. But honestly, it doesn’t even matter. If it’s a hundred billion or two billion, that’s a drop in the bucket. Even $100 billion is meaningless. I know that’s crazy, but in the face of a almost $40 trillion deficit, that’s $100 billion, right? So this is the situation we’re in. We have mandatory spending, interest payments, tax policy under many presidents of both parties have gotten us here. And frankly, when we start to look forward about what’s going to happen from here and what this means, it does not seem like anyone is seriously looking at solving this problem. There is no real policy on the table at all from either party about how we are going to reduce the deficit. It just keeps getting worse. When one party is in power, the other one seems to get very serious about lowering the debt. Then the other party gets in power and then the other party gets very serious about lowering the debt.
It is a bipartisan problem that no one wants to own. Neither party seems willing to raise taxes or address the spending issues because honestly, if you look at what you’d have to cut, it’s dangerous politically. If you just think about how these politicians are probably thinking about it, you’d have to cut Social Security, Medicare, defense. Those are things people do not want cut, right? Everything else is frankly trivial. People say we spend too much on education or on infrastructure or whatever it is. Honestly, that stuff doesn’t really even matter in the big picture. If you look at our federal spending about roughly, I’m just going to round, 60% of spending by the federal government goes to that mandatory spending category. 60% goes to Social Security, Medicare, Medicaid. Our interest payments, 14%, right? So that’s roughly 75%. You see what I mean here? Roughly three out of every $4 our government spends goes to Social Security, Medicare, Medicaid, or interest payments.
Everything else is 25%, including our defense budget. And if you actually want to break it down a little bit more, about 50% of that discretionary spending goes to defense. So everything else, everything else that our governments is like 12%. So yeah, you could cut stuff, transportation, international affairs, education, healthcare programs, veterans benefits, all that stuff if you want to, but it’s 12% of the total budget. All of that stuff combined, everything else is interest, social security, Medicare, and Medicaid. So again, just my opinion, but this is why I don’t think the problem’s getting fixed because no politicians are willing to cut these things. You can’t cut interest payments, right? They don’t want to cut Social Security, Medicare, defense. Nothing else would amount to much. Now, Democrats want to fix it by raising taxes, but haven’t done so in a way that reduces the deficit. Republicans want to lower taxes to grow our way out of it, but that hasn’t shrunk the deficit either.
So that’s where we’re at. But fortunately, it hasn’t really mattered that much yet. Yes, we see this debt on the national debt clock, or you can look it up, but as of right now, there hasn’t been a crisis. So people are wondering, does it matter? GDP has been growing. Unemployment remains pretty low. It hasn’t blown up yet, but we should ask, what happens from here? Can this keep going on forever? If we’re saying that the momentum is that the debt is going to keep growing, does this have an endpoint or can we just keep kicking the can down the road? And what does all of this mean for real estate investors? We’ll get to that right after this quick break. Stick with us.
Welcome back to On the Market. I am Dave Meyer. Today, we’re talking about our national debt, and we’re going to pivot our conversation here to just talking about where this thing is going. Now, could the situation get better? Maybe, right? Situation could get better. I think you have to think about what could happen. We could either, one, grow so fast that revenues increase. That seems to be the Trump administration argument. They have said that they believe if GDP grows at a 4% annualized rate, that it will shrink the debt ratio that our national debt will decline. It’s possible. There’s no evidence of that working in the past. If you just look at other tax cuts we’ve had over the last 50 years, deficits still grew. National debt still grew during that time. Not to mention that Trump administration has said GDP has to grow at 4% for that to happen.
We’re at 2% right now. So we don’t even know. We can’t even test that thesis right now because GDP isn’t growing fast enough. Second thing we could do to bring down the debt, raise taxes, bring in more revenue. Haven’t seen that happen. Third, significant entitlement reform, revising social security, Medicare, Medicaid to bring down spending. Haven’t seen any serious proposals for that. Some combination of the three, probably the most realistic.You’re not going to just do one of these things and have it erase $40 trillion of debt. It probably has to be some combination of these things, but there doesn’t seem to be any momentum on this. In fact, we’re going in the wrong direction. The deficit, the annual deficit, not just the debt. The annual deficit is getting bigger. We’re on track for potentially $3 trillion this year alone, right? So that’s the trajectory we’re on.
And so maybe it will get better, but personally, I think the prudent thing is to plan for this to continue. Maybe you believe that things will get better, but the evidence shows it’s just going to get bigger and bigger. Even though there’s been no crisis so far, I think we need to talk about what could happen. Now, one option is that nothing happens. Japan, you look at Japan. They have had a 200% GDP to debt ratio for decades without a crisis. It’s been fine. So that might happen. But there are two other scenarios that we should account for. And I want to say here that I’m not predicting these things are going to happen. Like I do on the show every day, I like to talk about scenarios and help educate you all on things that could happen, just so you can keep it in your mind and position yourself.
There are risks with a ballooning national debt. Whether that will come to a head and when is anyone’s guess. We don’t know. But the risks here are significant and they are significant enough to me in my personal investing and the way I allocate my money that I am accounting for this. And so that’s why I want to go into these scenarios to explain to you all what might happen. So again, first scenario, nothing changes. Markets don’t care. US reserve currency status provides us with padding. That is true. That does really help us. No one freaks out. Lending costs largely remain the same. And then eventually some combination of those things I just talked about happen and we get things under control. That is the best case scenario. Let’s all hope that is what happens. The second scenario is that the markets, quote unquote, the markets, the people who invest in the United States who lend money to the US government, force a reckoning.
If these people who buy US treasuries decide that the US is not being fiscally responsible and that they are likely to do something called monetizing the debt, perhaps print their way out of all of our debt, thereby reducing people’s real inflation adjusted return, it could trigger a cascade of negative outcomes for the economy. And in short, just to TLDR, basically this negative outcome is that borrowing costs go up. I know that doesn’t sound that crazy, but I’m going to explain how this can create a whole spiral here. But basically people say, “You know what? The US government is being irresponsible. We don’t want to lend them more money at a 4% rate for 10 years. We require five and a half percent to account for the risk of inflation.” That could happen. And what really matters here is confidence. It really matters if whether the buyers of US Treasury bonds continue to believe that they will be paid back at a real … And when I say real, I mean inflation adjusted rate of return.
This real rate of return is really important because the US government will not default. No one is seriously worried about the United States not paying their interest payments on their debt. Do you know why? Because they own the printing press, right? They own the mint. They can print more money anytime that we want. That is … Some would say the pros, some would say the cons of a fiat currency, right? They can print. So they’re not going to default. The risk to the people who own these bonds is that we will print so much money. This is what is called monetizing our debt. We will print so much money just to pay off our interest on these debts that the real rate of return, the inflation adjusted rate of return will go down. Because you’re lending the government money for 10, 20, 30 years, but they’ve printed so much money that when you’re getting those interest payments 20 years from now, the money’s basically worthless, right?
And then you’re receiving a negative real rate of return. This is the risk. If bond investors start to see this as a potential reality, they will demand higher interest rates. If they’re saying, “You’re going to print money and deplete my entire return, I’m not lending you money at 4%. You got to pay me 6% now to account for that risk.” And if that happens, just think about that. If bond yields go up in that way from 4%, at 4.3 right now, imagine if they went up to 6% that or it’s business spending, right? All of a sudden, businesses across our economy have to pay a lot more to grow. It’s certainly going to hurt the housing market, right? Even if mortgage spreads stay the way they are, and they probably won’t, they’ll go up. We’ll go from 6.5% mortgages from that to 8% mortgages. We can go to 9% mortgages in just that scenario.
And it will also cause a big debt spiral with our federal government because the reason the government would be printing money in the first place is to pay its interest. Now all of a sudden interest rates go up. They need even more money to pay their interest. The total interest that they have to pay every year goes up and up and up, so they might have to print more money. This causes a debt spiral. This is the risk of carrying too big of a national debt. People lose faith in the integrity of our debt and budgets and our borrowing costs go up. And that could grind a lot of parts of the economy to a screeching halt. So again, like I said, it is not a prediction that this is going to happen at any given time or date, but that is the risk that I want you to understand.
And we, as real estate investors, at least I believe, should be preparing for that. And I’m going to share with you how I think we should prepare for that right after this quick break. We’ll be right back.
Welcome back to On the Market. I’m Dave Meyer talking about our national debt. Before the break, I told you this could just keep going. There might not be a crisis in the near term. We don’t know, but there is risk that people lose faith and a lot of this is on sentiment. And I don’t like that. I don’t like being in a situation where all of a sudden investor sentiment could change a lot and it impacts my portfolio. So I like preparing for the potential risk here. I’m not going to change everything I’m doing, but I think there are practical things here that real estate investors should be thinking about. And again, just to reiterate what I said before the break, the big deal about the national debt is its connection, of course, to the whole economy. That impacts everyone. But the direct relationship to the housing market is through mortgage rates because if borrowing costs go up and treasury yields are our benchmark here, not the federal funds rate, if higher treasury yields push up mortgage rates, it could make affordability worse and that could weigh on appreciation and home values, right?
So those are important things. If the debt is monetized, if we start printing money, not good for growth in our economy, but real estate’s a great hedge against that. So we have to balance these things. It’s not necessarily all negative. We don’t know how this will play out, right? We don’t know if the debt’s going to get monetized, so we can’t go all in on that, but I also don’t think we should be ignoring it. And so the way I think about this, at least, is that in the short term, I don’t really think it’s going to matter that much. It could, but right now, the housing market is much more impacted by this supply push inflation that we’re seeing. You want to learn more about different types of inflation. Recommend checking on an episode I did a couple of weeks ago in early April, just about different types of inflation.
Right now, inflation is going up, but it’s not the inflation that we like in real estate, which is called demand pull inflation or this monetization kind of inflation, which real estate is a great hedge against. Right now, we’re with the supply push inflation and the debt stuff, not really hitting the housing market. Maybe a little bit, maybe it’s driving up mortgage rates a little bit, but it is not the driving force in what’s going on. That’s a higher federal funds rate, higher treasury yields, higher inflationary pressure. But over the long term, it’s structurally elevated treasury yields. If we just have higher mortgage rates and that becomes the new normal, that matters, right? That’s the risk I want to hedge against. And if you listen to the show, I say this stuff all the time. I think there’s a good chance mortgage rates are higher in 10 years than they are today.
I’ve been saying this for several years and this is why. This is exactly why. This is what I’m talking about when I say that there is a chance mortgage rates go up. It’s because of the monetization of this debt. This could suppress appreciation. It also could be a great reason to buy now. If you could buy and lock in a 6%, 6.5% mortgage rate, you’d probably be pretty happy if rates go up to seven, eight, 9% in coming years. So I think that’s the scenario to plan for. How do you position yourself today in this scenario? And again, it’s just a scenario that where mortgage rates might be higher in five years, 10 years. If we might monetize our debt in five years or 10 years, what do you do as a real estate investor? For me, it’s about hedging. Doing things today that are good investments no matter what, but to take into account the potential for this stuff happening.
Now, I want to be in real estate now because I think it’s good investment right now, but I also want to be in real estate right now because one, we might not see mortgage rates really low five, 10, 20 years from now. So I can lock in that debt and that’s really valuable. I want to be in real estate now because it can hedge against massive inflation and money printing. If the debt is monetized, real estate is going to be one of the best things that you can be in. Think about this. If there is a debt crisis like this, the people who get killed, the worst scenario to be is to be a lender. If you are lending out money at a fixed rate and you are getting paid back in inflated dollars, your real returns are getting crushed. But think about it from the other perspective.
If you are a real estate investor, you’ve locked in your debt at 6%, 6.5% for 30 years. And then for 30 years you pay that money back in devalued inflated dollars, that actually increases your return. That’s a great hedge against the potential implication for higher borrowing costs. So that’s one way I think about hedging. The second thing is cashflow. Cashflow will still work in this kind of market. You’ll probably see rents go up, but your debt will stay fixed. That is another way to hedge against inflation, against higher borrowing costs that may come in the future. So even though appreciation could be suppressed by higher borrowing costs, that might not be true, by the way, because if we inject a bunch of money into the economy, nominal home prices might go up. Real home prices might go down. But even if real home price appreciation is subdued in the future, amortization’s going to work even better based on what I was just saying, and cashflow will absolutely still work.
So I’m not saying that real estate will make everything okay if borrowing costs go up. It probably won’t. It’s not going to be a good time if this stuff happens at all. Asset prices could fall in real terms, but real estate could help you mitigate a very challenging national financial situation. So the way that I am hedging and preparing for this maybe situation is number one, don’t count on cheaper debt. I’ve been trying to say this for years. Please, please, please, please, please. Underwrite to the six and a half percent mortgage that you’re getting. And do not assume that rates are going to be lower in the future. Hopefully they are, but we do not know. They might be higher in the future, which is why the advice I’ve been giving on this show for two straight years now, fixed rate debt. Get fixed rate debt.
That is how you hedge against this scenario. Best way to hedge. If you’re doing a short-term thing like a flip, you could do adjustable rate. But if you are holding onto something, get fixed rate debt. Even for me, if I am going to invest in a commercial property, I am going to try very hard to get fixed rate debt, or I might not buy it. That is how important this is to me right now. I think it’s super important to hedge against this. Fixed rate debt is the number one way to do it. I want to reduce my dependence on refinancing. I don’t want to have to refi five, seven, even 10 years from now. A lot of people try to mitigate risk by making that adjustable rate mortgage longer. You have 10 years to refi. Might not be better in 10 years. So I don’t want to have to refi.
I want to be able to do it opportunistically if things get better. But I do not want to assume that rates will be near where they are right now. That’s number one, fixed rate debt. Second thing, maintaining liquidity. I think this is key in these kinds of scenarios is make sure you have really good cash reserves. We don’t know if a crisis will hit. I’m not predicting one, but I personally carry more cash these days than I did a couple years ago. I just think it makes sense. Not for any particular reason. I don’t know how I would use it, but in these kinds of scenarios when there’s so much uncertainty, I just think it makes sense to hold more cash. Number three, thing that I’m doing is favoring cashflow over appreciation and underwriting. I’ve been saying for many reasons for years now, I think appreciation’s going to be slow.
We’re in the great stall period. I think it’s going to be slow for five years, maybe. Could be longer. I don’t know. But cashflow still works, right? Cashflow still works. It’s harder to find, but it’s getting easier to find right now. Prices are going down. Rents are still growing. That means cash flowing is going to get better. And I want that. That is the second way that you hedge. If you have fixed rate debt and you have positive cash flow, hard to lose in real estate, right? I mean, maybe if prices absolutely tank, but in these monetization scenarios, prices could go up in nominal terms. It’s just in inflation adjusted terms, they might go down. So I think cash flow, fixed rate debt, best way to hedge against this. So those are the real estate things that I’m focusing on. Those have really started to define my buy box here.
Well, not really for the last two or three years, but as the debt gets bigger and bigger, I think this is prudent. Now, if you invest in things outside of real estate, you can also do other hard assets. You can buy things like gold. I’ve been buying gold for a while, but it’s a topic for another time. Commodities, right? You can get into that kind of stuff if you’re interested. Not my area of expertise, so I’m not going to go into it in detail here, but those types of things, at least seen as hedges against these scenarios. But most of all, I think this is just something to keep an eye on. Most people are ignoring it. You see the headline, you’re like, okay, oh, it went from 30 trillion to 40 trillion. What does it matter? And right now it hasn’t. Going from 30 to 37 trillion has made almost no difference in our economy, and that’s crazy.
But it can change on a dime. It really just comes down to sentiment of these bond investors, and that can change whenever. My gut instinct is that this is not going to get solved politically at least anytime soon, and that there is a rising chance that the markets force this to happen at some point. And if that happens, you will be grateful to understand this issue and to be properly hedged and prepared in your real estate portfolio and the rest of your life. Hopefully, this episode has helped you understand our national debt, where it is going, and what it could mean for real estate investors. Again, if you like this show, please share it with a friend, like it, or write us a review on Apple or Spotify. That’s our show. I’m Dave Meyer. I’ll see you next time.