Transcription
Hello and welcome back everyone. Thank you so much for being here today.
The United States national debt has reached a new milestone and not in a good way. As of late October, the Treasury Department reported that America's gross national debt has soared past $38 trillion for the first time in history. To put that in perspective, that is about $111,000 for every single person in the country.
What's even more alarming is the speed at which it's growing. The debt ballooned by $1 trillion in just 82 days. That's $1 trillion in just 82 days, less than three months. This is a staggering pace that's left economists, policy makers, and ordinary people wondering what happens if it keeps growing.
I'm in the process of writing an entire article on this that will be available and published on my substack on Patreon. Both are linked in the description below. I hope that you can subscribe. But let's cover the basics in this video first.
To understand the problem, we need to look at what this debt actually means. The national debt is the total amount of money the United States government owes its creditors, both domestic and foreign creditors, plus the interest owed on that borrowed money. It is the cumulative result of decades and decades of government spending that has consistently outpaced revenue. So in very simple terms, the federal government has been using a credit card, spending more than it earns, and now the balance has grown to a size that is impossible to ignore.
The Congressional Budget Office projects that this debt will continue climbing for decades. Its long-term outlook predicts that driven by sustained deficits, we have a deficit every single year, America's debt will grow far beyond any previously recorded level over the next 30 years. So in other words, this isn't a temporary spike. This is a structural problem that is baked into how the US economy and political system now function.
Well, I'd love to stand here and tell the American people we can cut your taxes and we can increase spending and everything's going to be just fine. But I can't do that because I'm here to deliver a dose of reality. Congress can do funny math, fantasy math if it wants, but bond investors don't. And this week they sent us a message. Moody's downgraded our credit rating. And the bond investors who buy our debt and finance finance our debt demanded higher interest rates on the 10-year note, the 20-year note, and the 30-year note. We're not rearranging deck chairs on the Titanic tonight. We're putting coal in the boiler and setting a course for the iceberg.
But let's be clear, this isn't just a Washington problem. The rising national debt affects you directly, too. It affects your job, your wages, your loans, and even the prices that you pay at the grocery store.
Economists often look at the debt to GDP ratio, which compares the total debt to the size of the economy. And that ratio helps show how sustainable a country's debt really is. A higher percentage means the government owes more relative to what the economy can produce. It is like earning $50,000 a year but owing let's say $500,000 in loans. It is just simply incomparable.
When debt rises faster than economic growth, the consequences begin to ripple through the entire economy. Higher debt makes investors demand higher interest rates to lend money to the United States government. And those higher rates don't just affect Washington, they spill over into the broader economy. So it means mortgage rates rise, car loans get more expensive, credit card interest goes up, businesses face higher borrowing costs which can of course lead to fewer investments, slower expansion, layoffs, and stagnant wage growth for workers.
Then of course there is the issue of interest payments themselves. The government doesn't just owe $38 trillion, it owes interest on that $38 trillion too. And as the balance grows, as it continues to grow, so does the amount of money that must be paid just to service that debt. Those interest payments are now one of the largest single expenses in the federal budget, rivaling defense spending and even Medicare. That means billions of dollars that could go toward infrastructure, education, or healthcare are instead used to simply pay off interest on the money borrowed years ago.
How did we get here? That is a big question. Well, several factors have driven that surge. First, mandatory spending on programs like Social Security, Medicare, and Medicaid has climbed sharply as America's population ages. At the same time, defense spending has increased dramatically since the September 11th attacks with two decades of military operations adding trillions and trillions of dollars to the bill. Then came economic crisis. The 2008 financial crash forced the government to inject trillions into the economy to prevent total collapse. And just as recovery began to stabilize, the pandemic struck, prompting even more emergency spending from stimulus checks to business relief and public health funding. Layer on top of that, the political dysfunction in Washington. And of course, I'm referring to repeated debt ceiling standoffs, short-term spending bills, and a failure to pass long-term budgets. And you get a perfect recipe for chronic deficits and unchecked borrowing.
According to the Government Accountability Office, if this trend continues, which it is likely to continue, the effects will be deeply felt in everyday life. Expect higher interest rates on home mortgages and car loans, stagnant wages as companies face tighter financial conditions, and more expensive goods and services as productivity growth slows. The government could also face pressure to make difficult choices such as including potential cuts to domestic programs that millions of Americans depend on.
Inflation is another potential consequence. When a government borrows heavily, it risks devaluing its own currency over time. If debt continues to grow faster than the economy, inflation could reappear in waves, eroding the purchasing power of your paycheck and your savings.
So, what happens if the US national debt keeps rising unchecked? Well, eventually markets may lose confidence in the government's ability to manage its finances responsibly. That could of course trigger higher borrowing costs or even a fiscal crisis, something that until recently seemed quite unthinkable for the world's largest economy. The $38 trillion milestone is a warning sign. A sign that America's financial foundation, long considered unshakable, is starting to show really big cracks. The question isn't whether the debt will grow, but how long it can grow before it grows out of control.
What are your thoughts on the $38 trillion wall of debt? Comment below as always. I would love to hear from you. I appreciate your time. Thank you so much for joining me and I will see you in my next one. Remember to subscribe and make sure that you follow me on Substack and Patreon for more updates. I'm also very active on Telegram and X former Twitter and I would love to see you there as well. Have a great rest of your day and I will see you back here tomorrow. Take care.