Rising interest rates have turned what once seemed a manageable tool of crisis response into a structural risk. U.S. debt now nears the size of the economy, with annual interest costs exceeding defense spending and credit ratings downgraded. For decades, cheap borrowing and the dollar’s reserve role muted consequences, but those assumptions no longer hold.

Across advanced economies, similar pressures collide with populist resistance to fiscal restraint, leaving governments trapped between austerity’s political costs and deficits’ financial weight. History offers only limited strategies—default, inflation, repression—each with profound trade-offs. The question that remains is whether democratic systems can adapt before the next shock makes the choice unavoidable.

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