Japan's Interest Rates Hit 6%, 100% of Tax Revenue Goes to Debt Interest. America Could Be Next.

A China-like debt debate is not in the article, but the focus is on Japan and the possibility that the United States could face a similar sovereign-debt dynamic, according to Peter Schiff. Speaking on The Peter Schiff Show Podcast, Schiff said Japan’s debt-to-GDP is around 250%, citing national debt of $8.3 trillion, and argued the country is vulnerable to even modest increases in government bond yields. He estimated Japan collects about $500 billion in annual tax revenue, which could be absorbed by interest costs if yields rise, claiming that at 4% interest rates two-thirds of taxes would go to servicing debt, and at 6% all tax revenue would be consumed. The piece contrasts Schiff’s view with Goldman Sachs Asset Management, which noted Japan has carried debt above 200% of GDP for over a decade, and with Vanguard’s 2026 outlook expecting the Bank of Japan to gradually lift its policy rate to 1% while keeping debt sustainable. It also cites Schiff’s proposed mechanism of a yen weakening/inflation/yield spiral and references Fed data on US federal debt at 122.77% of GDP as of Jan. 1, 2026, plus 10-year and 30-year Treasury yields around June 17.