Taxpayers everywhere should brace themselves. Their taxes could soon rise unless there are fundamental changes in the way that increasingly unsustainable government debt in the United States, Japan and beyond is financed. This can be done, but it will involve tough political decisions.Attempts by national leaders to boost defence and other spending in the wake of a profligate borrowing boom make a crisis inevitable. While stock markets continue to ride high, the stress in key global bond markets is beginning to show through as a warning signal to investors.An insufficient proportion of income and savings in major countries is being directed into financing public spending on defence, health, infrastructure, climate change remediation and other priorities. Governments normally turn to borrowing to plug the gap between tax revenue and spending, but bond markets around the world are in revolt, as shown by rapidly rising yields on sovereign bonds.Frederick Kempe, president of the Washington-based think tank Atlantic Council, wrote on August 25 that converging recent events – the US national debt hitting a record US$40 trillion, the new “economic D-Day” campaign against Iran and the US-Canada trade war – posed threats to US global leadership.The inverse of rising bond yields is falling bond prices. This applies especially to long-term bonds, and so governments are forced to issue increasing amounts of costly short-term debt, raising their already lofty debt service ratios.Trump, Ontario premier trade insults amid tariff warPeople should understand that, in addition to facing higher tax bills, a greater proportion of their savings should go into financing public investment. Currently, too much of people’s discretionary savings go into the stock and bond markets, where money is often directed into fashionable investments such as artificial intelligence (AI). Fund managers competing to achieve maximum returns will follow a herd mentality rather than pursue the public interest.