Reading Time: 3 Minutes
It’s Fridayyyyyy!
Hooray and Amen to that.
Dunno bout you but I feel like I’ve been crawling my way to the finish line… it’s almost… here.
And then I realize there’s no childcare on weekends.
FML.
Say what now? We have to look after our own kids on the weekend?
Pish posh paddle wash.
All seriousness though, cos today’s topic is fairly serious – there’s something serious afoot.
Many of you dear readers would know about the serious situation the US is currently in.
No I’m not talking about President’s Trump inauguration, or his tariffs* (professional poker at its brilliant best) or even his various business ventures in crypto (ahem $Trump ahem $Melania ahem), no I’m talking about the dirty lil secret no one wants to talk about.
That the US is swimming in debt.
And by swimming I mean drowning.
But hey, tomayto tomahto.
*Editor’s Note – for those of you unaware, Trump unleashed billions of dollars worth of tariffs (tax on goods and services coming from another country) against Canada and Mexico and then “postponed” these tariffs at the 11th hour as both Canada and Mexico agreed to step up measures against illegal drugs and immigration into the US. Trump also extended his tariffs on China and has the EU in his sights… which most likely kicks off a trade war, a story for another day as I could only find the one tomato dikpik on the internet.
Anywho, whilst we were all distracted with the constant mediaporn surrounding The Donald, the Congressional Budget Office (kinda like our Bureau of Statistics, yknow numbers and reports and stats stuff) has been ringing the alarm on the US national debt.
By 2029, the US debt is expected to exceed 107% of GDP, surpassing the previous record set after World War II.
What does this mean?
Well, the US debt is the amount of money the US government has borrowed to cover their spending. Or to put it simply, when spending exceeds revenue, a budget deficit results.
To pay for this deficit, the US government borrows money by selling “stuff” (Like T-bonds, bills, treasury securities etc) which investors (creditors) buy and hold and receive interest repayments.
Just like when you or I use a credit card for purchases and not paying off the full balance each month, the US government is doing the same – and incurring huge interest bills on a huge debt amount.
How big?
This much:
Or if you wanted to visualize it:
Quite frankly this is a seriou staggering amount.
And any personal household would have long been declared bankrupt and having to restart afresh.
But this is the US government right?
This year, the budget deficit (spending vs revenue shortfall) is projected at a mere $1.87 trillion – no big deal, right?
Just 6.2% of GDP, which is laughable when you remember that the U.S. last went into similar levels of debt as a % to GDP because, um, WW2.
By 2035, the debt will reach $52.1 trillion – 118.5% of GDP – if everything goes according to plan. This, of course, is based on the assumption that Trump’s tax cuts don’t add even more to the deficit, which they absolutely will.
Who do they owe this money to?
I did a bit of digging around and most of the US government debt is owed to… the public.
About $26trillion-ish worth – this includes the banks, insurance companies, foreign governments, private investors etc – all holding a piece of US T-bills and other treasury securities.
The remaining balance of $10ish trillion is owed to… themselves – that is the quintessential right hand lending to the left e.g. things like Social Security or Medicare or other public services that collect more in revenue than they necessarily need in a year and that surplus revenue is re-invested.
What to do?
Um, frankly, with the extremely partisan way American politics is nowadays – I don’t think a lot.
Realistically the only practical solution is to take decisive action – something like cut Social Security, raise taxes, or SHOCK HORROR spend less.
But neither political party wants to touch those hot potatoes.
Or we could go back to the money printing* days of the fed – when everything went Brrrrr.
*Editor’s note – money printing “can” erode the value of the debt due to inflation. Money supply increases -> more demand for goods and services as there’s more money circulating around -> increases inflation -> increases asset prices -> decreases real value of debt (suddenly $100 loan easier to payback today than yesterday cos we have more moolah to pay it off).
But my personal opinion doesn’t think it’s likely we will go back to the money printers.
So we are left with Captain Elon’s “Department of Government Efficiency” task force to try and save the day.
Or, you know, the debt could just keep growing until the dollar crashes and the global economy collapses.
Sorry to be facetious, it’s been a long week and I’ve got kids on weekends y’know.
~~~
Sponsor’s Note:
Today’s post marks the first sponsor’s note.
Incidentally this blog is sponsored by none other than me.
Or rather, my mortgage business.
I know I rarely advertise on this blog, but damn it if I’m going to let a good opportunity pass up.
So I’m going to include a little tidbit in every post – brace yourselves.
Maybe with something like:
“Hey check out the fixed rate pricing some lenders are offering on home loans!!!”
~~~
Did you enjoy this post? If yes, put your email in and click on the little “subscribe” button at the top right. You’ll also receive a free copy of the Complete Aussie FIRE e-book – The Ultimate Guide to Financial Independence for Australians.
Or you can follow me here:
P.S. Every post is the personal opinion of yours truly, please seek your own personal financial advice regarding your own personal circumstances.
One Comment
GovAssist Help
The U.S. national debt has reached a staggering $36.1 trillion as of January 2025, with $28.8 trillion held by the public and $7.3 trillion in intergovernmental accounts.
This rapid increase has led to significant financial implications, including annual interest payments nearing $952 billion, which now constitute 16% of federal spending.
In response to these challenges, Treasury Secretary Scott Bessent introduced the “3-3-3” fiscal strategy, aiming to reduce the deficit, stimulate GDP growth, and boost oil production. However, this approach has faced scrutiny regarding its long-term effectiveness.
Additionally, President Trump’s proposal to distribute a portion of budget cut savings to Americans as “DOGE dividends” has been criticized. Critics argue that such measures may exacerbate fiscal issues rather than provide sustainable solutions.
The bond market’s reaction to these policies serves as a potential check on fiscal plans, with concerns about inflation and economic stability influencing investor confidence.