Have you ever considered a country's debt becoming so large that it struggles to even pay the interest? It's not Argentina or Greece, but the United States. In 2025, the US national debt is projected to surpass \$36 trillion, and this number continues to climb.
The Crushing Weight of Interest Payments
Interest payments alone are predicted to exceed \$1 trillion this year. This means that the US is spending nearly \$3 billion every day just to service its debt. This money could be used for education, defense, or infrastructure. Instead, it's being consumed by interest.
How Did the US Get Here?
While it's easy to point fingers, this situation is the result of a system designed over the past 50 years. In 1971, President Nixon ended the gold standard, decoupling the dollar from gold and creating a "pure trust" currency. This gave the US the power to print money and issue debt to address every crisis.
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Crises and Debt:
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9/11: Interest rate cuts
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Financial Crisis: Quantitative easing
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Pandemic: Government stimulus
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Funding Source: Debt
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As a result, US national debt skyrocketed from under \$6 trillion in 2000 to \$30 trillion in 2020, and now stands at \$36 trillion and climbing. The US is sustaining its operations not through economic fundamentals, but by creating an illusion of economic growth fueled by debt.
Cracks in the Foundation: Warning Signs for US Debt
Three critical warning signs indicate a growing crisis:
1. Record Interest Payments
The Congressional Budget Office (CBO) forecasts that in 2025, the federal government will spend over \$1 trillion on interest payments alone. This means that over 10% of every tax dollar goes toward interest, before even addressing infrastructure, social security, or defense. This is money that adds no constructive value and will continue to grow each year.
2. Foreign Investors Retreating
The belief that US debt is the safest asset is starting to crumble.
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China: Has reduced holdings for seven consecutive months, reaching the lowest level since 2009.
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Russia: Almost entirely sold off US debt in 2022, investing in gold and the Yuan.
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Japan: Remains the largest holder but is adjusting its allocations.
These actions suggest that foreign investors are questioning the "risk-free" status of US debt.
3. Soaring Yields and Market Volatility
The yield on the 10-year US Treasury note hit 4.85% in the first quarter of this year, a 20-year high. Higher yields mean the market demands a greater return to lend money to the US government. This creates rising borrowing costs, increased stock market pressure, higher mortgage rates, and a slowdown in corporate expansion. US debt, a keystone asset of the global financial system, is becoming unstable. As PIMCO's investment officers have said, "If the price of US debt starts to oscillate, the entire world's asset portfolio will shake with it."
This instability translates to higher interest rates, mortgage burdens, unstable funds, fewer job opportunities, and shaky retirement plans – all stemming from the US government's ability to manage its \$36 trillion debt.
Trump vs. Powell: A Clash Over Debt Crisis
In April 2025, President Trump publicly criticized Federal Reserve Chairman Powell, blaming high interest rates for destroying the US economy.
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Trump's Perspective: Lower interest rates would reduce debt interest payments, stimulate investment, boost the stock market, create jobs, and win votes.
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Powell's Perspective: The Fed's mission is to control inflation and maintain financial stability. He argues that premature rate cuts will reignite inflation.
This clash creates policy uncertainty, which is dangerous for the debt market. Rumors suggest Trump may try to replace Powell early, undermining the Fed's independence. The global acceptance of US debt relies on the perception of a stable, rule-based system with an independent central bank. Without trust in this system, the security of US debt and the stability of the dollar are threatened, impacting everyone's assets.
The Future of Dollar Hegemony
Could the US debt be this big of an issue for the entire world? The US has not collapsed due to its immense debt, but the world is weary of it collapsing. The dollar has been the world's super currency for 70 years. The dollar's power comes from three main sources:
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Military and geostrategic power
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Global monopoly on the dollar settlement system
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Federal Reserve independency
These three sources have maintained the dollar's power, but these sources are beginning to fracture. Geopolitical issues are causing other countries to use other currencies. China is pushing for the use of the Yuan and countries are worried about SWIFT punishment. The cracks are beginning to show and the world is preparing for a transition.
The dollar's global bank reserves have dropped to their lowest amount in 25 years. This shows that the dollar is being diluted.
Navigating a Slow Default
The US national debt exceeding \$36 trillion is not just a financial problem, but a crisis of faith in the financial system. While it might not trigger an immediate collapse, it is a slow erosion of wealth.
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Acknowledge: This is not a bubble, but a systemic structural issue. Focus on the gradual erosion of wealth through debt and inflation.
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Diversify: Reassess asset exposure and consider non-dollar assets like gold, commodities, and Bitcoin. Diversify investments geographically, focusing on markets outside the US, particularly in Asia, energy, and food.
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Upgrade: Become informed about risks by understanding the logic behind systems and shifts in confidence.