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Among the famous nameplates that adorn the offices of Ivy League business schools is Joao Gomes. Gomes, a finance professor at Wharton Business School, raises a warning call that many of his colleagues have previously ignored: America's growing mountain of national debt.

Professor Gomes is what some might call an up-and-coming candidate: He was named senior vice dean for research in 2021 and added the Marshall Blume Prize from the University of Pennsylvania to his resume in 2018.

But the newly minted pundit isn't afraid to stand out from the crowd if it means pushing the presidential candidates for some answers. Gomes admits he is “probably” more worried about national debt than his colleagues, but refuses to remain silent on a explosive issue that he believes will plunge the global economy into chaos.

Gomes predicts that America's $34 trillion debt burden could roil the world's financial markets as early as next year if a president-elect announces a series of expensive measures.

And remember the mortgage crisis in the UK following Prime Minister Liz Truss's disastrous tenure? That's also possible, as Gomes said interest rates could rise to 7% “or more” if the issue is swept under the rug by Washington.

The warning does not sound alone. A growing cacophony of alarm bells has been ringing since the start of the year: JPMorgan Chase CEO Jamie Dimon says there will be a market “rebellion” over the issue, while Bank of America CEO Brian Moynihan says there is Time to stop “admiring” Recognize the problem and do something about it instead.

This fear also resonates outside Wall Street. Black Swan author Nassim Taleb says the economy is in a “death spiral,” while Fed Chairman Jerome Powell says it's high time to have a “grown-up conversation” about fiscal responsibility.

But even so, presidential candidates are unlikely to come to the stage with promises about how to reduce the debt-to-GDP ratio to a more bearable level (experts currently expect it to reach 190% by 2050).

“I wish it was a big issue, but I'm not sure it's in the interest of either party to make it a big issue,” Gomes told Fortune. “As we discuss promises: 'What will we do with taxes and programs?', it will be important to put them in the context of: 'Can we afford this?'”

“It's a really obvious moment in history that we're saying, 'Okay, what are our choices, what can we make feasible, who has the better plan?' I suspect that neither party is interested and everything could be swept under the carpet.”

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I'm probably more worried about U.S. debt than most of my professional colleagues. But in this election year, I believe voters should be asking much tougher questions of politicians who don't take this threat seriously. https://t.co/TDMDbCssVi

— Joao Gomes (@ProfJoaoGomes) February 16, 2024

While one party may have to make some unpopular decisions to address the problem, it is actually a problem created by both sides. Bank of America Research's Flow Show team, led by investment strategist Michael Hartnett, calculated in February that the deficits created under Presidents Trump and Biden are the largest since Franklin D. Roosevelt in the 1930s.

Trump and Biden both struggled with a struggling economy trying to cope with a global pandemic. FDR, of course, fought the Great Depression and then oversaw American entry into World War II.

Gomes believes that regardless of who contributed to the mess, one party must bear responsibility for cleaning up the mess: “Towards the end of the decade we will have to deal with it.”

“Frankly, it could derail the next government. If they come up with plans for big tax cuts or some other big fiscal stimulus, the markets could rebel, interest rates could skyrocket right there and we would see a crisis in 2025. That could very well happen. I am very confident that we will get there by the end of the decade, one way or another.”

Warning signals

As with any financial crisis, there will be warning signs as government debt increases – although this realization may not occur simultaneously for consumers and markets.

Gomes believes this will happen at the political level when the parties buying debt decide that the model is simply no longer sustainable. This could even be triggered by government measures announced at the start of the next administration, in turn unsettling a market that comes with a high price tag.

“The most important thing about debt for people is that they need someone to buy it,” Gomes told Fortune. “We used to be able to count on China, Japanese investors and the Fed [buy the debt]. All these players are slowly disappearing and are now actually being sold.”

America's ability to pay off its debt is a concern for nations around the world that hold a share of the $7.6 trillion in funds.

The countries most at risk are Japan, which had $1.1 trillion as of November 2023, China ($782 billion), the United Kingdom ($716 billion), Luxembourg ($371 billion) and Canada ($321 billion).

“If these people who have been happy to buy government bonds from major economies decide at some point, 'You know what, I'm not really sure this is a good investment anymore.'” I'm going to demand a higher interest rate, um to be convinced to maintain this. Then we could have a real accident,” Gomes said.

In that case, Gomes believes there would be a Liz Truss-like implosion in America. In 2022, the British MP advocated a mini-budget with a series of fiscal stimulus, which unsettled the city so much that the pound fell to its lowest ever value against the dollar.

After the shortest term as prime minister in British history, Truss was promptly ousted, but left a legacy: British mortgage rates rose by around 2% in just a few weeks.

And following this trend, mortgages – a cornerstone of Western economies – will be exactly where consumers will come under pressure. If mortgage rates rise above 7%, consumers will start pushing for change, Gomes said, adding that if policymakers don't take action now, the public will go back to those rates, “if not worse.”

Avoid exposure

The good news is that there are several ways to avoid this crisis. The bad news is that nothing at all has to happen for national debt to become the economic problem of the next decade – and it will be pretty inevitable once it's there.

And if you're wondering how much debt the government would have to pay off per person, that's not pretty: Current estimates put it at over $100,000 per person.

The way to avoid this problem sounds simple: if it's the debt ratio that worries everyone so much, just increasing the second variable is enough to bring the balance back into balance, right? Yes, but it means the economy is growing pretty quickly, and few are convinced America can do it.

The second solution is unpopular, but may be the government's only alternative: spending cuts. “Responsible budget proposals” could be enough to avert any market disruption, Gomes said, while “imposing significant cuts to some programs … opens a Pandora’s box of social unrest that I don’t think anyone wants to think about.”

If markets indeed rebel across the globe and rock the world's largest economy, the impact will be felt across borders. Unfortunately, Gomes is convinced that there will be no escape: “A government that runs into financing difficulties and cannot convince investors to finance its debts will probably have to increase taxes.” There is no way to protect yourself from this .

“Any burden, whether it's mortgages or loans, is really difficult to avoid in every way. It’s bad for the country across the board, but it’s hard to avoid infection no matter where you live in the world.”