Ruchir Sharma warns that America's persistent budget deficits, consistently running around 6 percent of GDP this decade, have shifted excess borrowing onto government books. After decades of stimulus, interest payments on public debt more than doubled in five years to over 3 percent of GDP, a new record. This surge, driven by growing unease and energy prices, has pushed global bond yields higher. Elevated rates are now crowding out AI groups, the largest issuers of new corporate debt. With 10-year Treasury yields at 4.8 percent, Sharma identifies 5 percent as a critical threshold. When yields decisively breach this level—the upper end of the range since the dotcom era—the AI bubble risks popping. At that point, Big Tech will compete for capital against government bonds yielding over 5 percent, potentially crowding out mega-projects. Estimated AI revenue of $200 billion this year pales compared to the $1 trillion spent on data center infrastructure. Increasingly reliant on bond and equity issues to fund the gap, AI groups face serious consequences if government borrowing costs rise further.

Key names and numbers:

Ruchir Sharma - Chair of Rockefeller International, author of 'What Went Wrong With Capitalism'

6 percent of GDP - US budget deficit this decade, more than twice the average of earlier decades

3 percent of GDP - Interest payments on public debt, a new US record sharpest increase for any major developed economy

4.8 percent / 5 percent - Yield on 10-year US Treasury bonds, critical threshold for AI bubble risk

$200 billion / $1 trillion - Estimated AI revenue this year versus data center infrastructure spending