Janet Yellen warns the $38 trillion national debt is testing a red line economists have feared for decades

Multiple finance outlets report U.S. national debt has crossed roughly $38–38.5 trillion, putting debt-to-GDP above 120%. Former Treasury Secretary Janet Yellen warned at an American Economic Association panel that "the preconditions for fiscal dominance are clearly strengthening," with projections of debt rising toward 150% of GDP over decades. Economists (Eric Leeper, Heather Long, Torsten Slok, Geng Ngarmboonanant) argue that large interest payments (now >$1 trillion/year) and a shift in Treasury holders toward private investors and hedge funds increase bond-market influence over policy. Analysts warn this could force the Fed to tolerate higher inflation or act as a buyer of last resort, while corporate and stablecoin demand for bonds may compete with Treasury issuance. The situation is ongoing, with implications for mortgage and consumer borrowing costs, Treasury yields, and the Fed's independence.