Now Reading: High Bond Yields Put Governments’ AI Growth Bet at Risk
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High Bond Yields Put Governments’ AI Growth Bet at Risk
Thirty-year bond yields in the US, France, Japan and Britain are near their highest levels since the 2007-09 global financial crisis, the Hindustan Times reports. Sticky inflation, large budget deficits and geopolitical…
The Story in Brief
Thirty-year bond yields in the US, France, Japan and Britain are near their highest levels since the 2007-09 global financial crisis, the Hindustan Times reports. Sticky inflation, large budget deficits and geopolitical risks are keeping borrowing costs high. In the US, a one percentage-point rise in bond yields could add interest costs equal to 1.3% of annual GDP within a decade.
Governments increasingly appear to be relying on AI-driven growth to manage their debts. Goldman Sachs estimates data-centre investment at $1 trillion this year, adding to demand for capital. Yet AI has not measurably lifted productivity so far. The gains could also bring job losses, lower tax receipts from labour, higher welfare costs and greater defence spending, limiting any fiscal benefit.
The Indian Opinion
The easy story is that AI will rescue governments from years of overspending. The equally lazy counter-story is that high yields alone signal an imminent debt crisis. Neither is established here. The immediate test is whether productivity rises before interest bills, welfare costs and defence demands do. Until that happens, borrowing on the promise of future AI gains looks like a costly gamble. Can governments cut deficits without waiting for a technology forecast to come true?
Source: hindustantimes.com
This story was synthesised by AI from the source linked above.
