Global investors spend a great deal of time worrying about an alleged artificial intelligence bubble. However, they should pay more attention to the government debt bubble.

The most dangerous assumption is that governments can keep borrowing and making promises because central banks will always step in, disguising fiscal irresponsibility with quantitative easing programs. Many market participants hail debt accumulation and expanding government size in the economy because they believe it will create asset inflation forever. However, encouraging malinvestment and complacency is a poor long-term strategy.

Furthermore, buying government bonds does not create the wealth needed to pay for those promises. Many pension funds and Keynesian market participants are discovering that supporting constant government expansion is not profitable. The massive losses in some complacent bond portfolios show the mistake. The Bloomberg Global Aggregate Index remains significantly underwater from its early 2021 peak, sitting at an overall net decline of approximately 16% as of September 25, 2026. Smart bond investors have steered away from duration and government debt, concentrating their strategies on credit, low duration, and private debt.

In 2021, The Economist ran an entire number hailing “The Return of Big Government” as the end of the so-called—but inexistent in practice—”austerity” paradigm and the evidence that more spending and a big state was the solution to the post-covid world, delivering economic growth, social spending, and sustainability.

In 2025, the same publication ran a number called “The Coming Debt Crisis“

The outcome of the return of big government was the return of persistent inflation, stagnation, and unsustainable debt. Who would have guessed it? Anyone doing the numbers and everyone who understands that government stimulus and so-called public spending multiplier effects are simply myths of statism.

Diesel’s Record Price Is Not Just the Iran War: It Is the Cost of Interventionist Energy Policy

How taxes, regulation, refinery closures, sanctions and declining domestic production turned a geopolitical shock into a diesel-price crisis

Do not blame diesel prices on the Iran war or the disruption of the Strait of Hormuz. The geopolitical risk premium attached to oil prices is relevant, but the market was already weakened by policy choices.

Europe has taxed motor fuels heavily, imposed escalating regulatory and carbon costs across the supply chain, closed refining capacity, sanctioned major sources of refined-product supply, and discouraged investment in domestic oil and gas production. Today’s refined product system is smaller, less flexible and more import-dependent, and, as such, every geopolitical disruption produces a larger price shock.

Three members of the Federal Open Market Committee voted to raise rates in July. However, the Committee held the federal funds target at 3.5%-3.75% by a 9-3 vote. Bank of America, Deutsche Bank, and J.P. Morgan all expect a September hike. Across the Atlantic, the European Central Bank raised rates by 25 basis points in June and is expected to raise them again in September.