Federal Reserve Chair Jerome Powell expressed concerns about the fiscal trajectory of the U.S. while addressing the students at Harvard University on Monday.

Powell acknowledged that the $39 trillion debt load, while not immediately threatening, is on an unsustainable path that demands urgent legislative intervention. "It will not end well if we don't do something fairly soon," Powell said.

He distinguished the level of debt and its trajectory, arguing that the U.S, as the issuer of the world's reserve currency and home to the deepest capital markets, can sustain a far larger debt burden than smaller economies.

In response to a student's inquiry about the U.S. debt's breaking point, Powell said that the exact threshold is uncertain. However, he underscored the clear trend of the federal government's debt growing significantly faster than the economy. "And in the long run, that's kind of the definition of unsustainable," he added.

Despite his warnings, Powell did not advocate for outright debt repayment. Instead, he proposed a more modest solution: achieving a primary balance and ensuring the economy grows faster than the debt. He also reminded that fiscal policy is not within the Fed's jurisdiction, and his warnings often go unnoticed in Washington.

Iran War To Push Debt To $40 Trillion?

The U.S. national debt hit a record $39 trillion earlier this month, with defense spending increasing following an attack on Iran and heightened Middle East tensions. The federal debt-to-GDP ratio has surged in recent years to 124.8%, up sharply from 58.7% in 2000, 34.5% in 1980, and 53.1% in 1960.

Michael Peterson, CEO of the Peter G. Peterson Foundation nonprofit, told AP that the U.S. national debt could reach $40 trillion before the fall elections, calling the rapid, unchecked borrowing with no clear plan "unsustainable."

Earlier this year, former Federal Reserve Chair Janet Yellen warned about the potential risks posed by America's rapidly increasing national debt, highlighting the risk of "fiscal dominance," where political pressure forces the central bank to maintain lower interest rates than warranted by economic conditions.

Senator Rand Paul (R-Ky.) has also criticized the high cost of the Iran war, warning that runaway government borrowing-not foreign adversaries-poses the greatest danger to the United States.