The U.S. Is Quietly Revaluing Its Debt — And Almost No One Noticed
This overlooked shift in U.S. debt may be more important than it seems.
We just got a new report which says that our national debt is becoming a bigger problem than originally anticipated, because we are getting closer to a dangerous feedback loop, where right now the United States government is spending a lot of money that they don’t have, and then they have to pay that money back plus interest.
The government is running out of money to continue paying off this debt, so we’re getting closer to a point where the government might be forced to borrow money to pay back the previous debt.
That obviously would have big consequences, not just for our economy, but for the United States dollar, the stock market, and every asset price.
Let’s break this down, because in 2025, for the first time in history, the United States government spent more than $1 trillion on interest payments.
When the government spends money, they are spending your tax dollars. That means the second largest expense in all of 2025 for the United States government was just paying back the previous debt plus interest.
The United States government spent more money on interest payments than it did on veterans’ benefits, Medicaid, Medicare, and our military.
The only thing that the government spent more money on than interest payments was social security.
And to put this in perspective, we are now paying three times more in interest payments today than we did just 5 years ago.
The reason why that’s so significant is that our growth in interest payments that the government has to pay is faster than the growth we’ve seen in the stock market.
It’s faster than the growth we’ve seen with gold prices.
It’s faster than the growth we’ve seen with silver prices, because silver prices have grown by more than 160% over the last five years.
Now, you might hear that and say. How do we fix this problem? Shouldn’t the government just cut back on its expenses and try to reduce its debt?” Yes, that’s what a financially sound person would do.
The government doesn’t operate the way a financially sound person would, because the government isn’t in the business of trying to pay down its debt. They’re trying to just not have the debt grow too fast.
How do I know this? Because the committee for a responsible federal budget just published this, the quote that trillion interest payments are the new norm.
So, to understand why this is so significant, there are three things you want to pay attention to that I’m going to break down.
- Why are our interest costs so high here in the United States government?
- Why can’t we fix the problem?
- What is this going to mean for you?
Q1: Why are our interest costs so high here in the United States Government?
So, starting with why interest costs are so high and who we are paying this money to, the United States government generates tax dollars from taxpayers.
That is their one source of revenue. They have a bunch of different types of taxes.
- You pay your payroll taxes.
- You have your FICA taxes, which are your social security and Medicare taxes.
- You have property taxes, sales taxes, capital gains taxes, estate taxes, tariff taxes, and many other types of taxes.
The government collects these tax dollars, and then they use these tax dollars to spend somewhere in our economy.
They’re building infrastructure, maybe they’re investing in AI, maybe they’re hiring teachers or firefighters. That’s how the system works.
But what we’ve been seeing happen is that the United States government has been spending a lot of money that they don’t have.
More specifically, the United States government has been generating around $5 trillion of tax dollars and then spending an additional couple of trillion on top of that.
Now, when the government spends this couple of trillion dollars that they don’t have, this money has to come from somewhere, because they’re borrowing this money.
There are three general places where they can borrow this money. They can borrow this money.
#1. From private people and entities. So people like you, me, and big companies can lend money to the United States government in exchange for interest, because if you lend money to the government, they’re going to pay that money back plus interest.
#2. The United States government can borrow this money from foreign countries like Japan and the United Kingdom.
#3. The United States government can work with our central bank, which is the Federal Reserve Bank, to borrow that money when it can’t get enough money from other places.
And this is where things get very interesting, because the Federal Reserve Bank, although they’re called the Federal Reserve Bank, they’re actually not a bank, because you and I can’t go there to deposit money.
They are not a reserve, because they’re not sitting on any cash reserves, and they’re actually not federal.
It says so on their website. And so when the United States government wants to borrow money from the Federal Reserve Bank, they call up the Fed and say, “Hey, can you lend us a trillion dollars?” And the Fed says, “Yeah, we don’t have any money, but we can create that money.”
The Federal Reserve Bank is the central bank here in the United States, and while they don’t have any cash, they don’t have any money.
What they do is they can print this cash. They have the ability to print these dollars, and then they lend them to the United States government.
Now, you can start to see why this becomes a problem, because if the United States government keeps spending money that they don’t have, that means more money gets created out of thin air.
As you keep creating money out of thin air, you’re not actually creating more wealth.
You’re just creating more denominations of what we think is wealth, these more paper dollars.
What ends up happening, as you just keep printing more and more of these dollars, is that the value of each dollar goes down, which causes the prices of things to go up.
This is what inflation is. So every time you hear about government spending, especially deficit spending, meaning spending money we don’t have, you have to think about inflation.
Now the question might be, you might be wondering, well, who does the government owe all this money to? Because the United States government has 38-39 trillion worth of national debt.
The people they’re paying this money to are,
- The private individuals who have lent money to the government, all the foreign countries like Japan, the United Kingdom, and China,
- Which has lent money to the United States government,
- Then number three is the Federal Reserve Bank.
What’s happening is that the government is collecting tax dollars. You’re going to work every single day to get paid, and you pay taxes to the government.
More and more of your taxes are being used not to benefit you, but to pay back yesterday’s expenses.
Interest payments are now the second-largest expense for the United States government.
That’s the first time it’s ever happened. It happened in 2025 because we paid over a trillion dollars in interest.
Q2: Why can’t we fix the problem?
And now you might say, well, why can’t we fix this? This brings us to number two: why can’t the government fix this problem?
If you are facing financial problems, you have too much debt, you have two solutions.
You can cut back on your spending. Or you can increase your income, or you can do both of them. You should do both.
Well, for the United States government, both of these have consequences that many people just don’t want to go through.
Q3: What is this going to mean for you?
When it comes to cutting expenses, it sounds great. The government should cut expenses. Well, if the government were to cut expenses, what does that mean?
That means they might reduce staff, and people will lose their jobs.
They might cut government contracts, companies lose money, companies lose their jobs, employees lose their jobs, or the government cuts funding, which means people lose their jobs again.
These have real-life consequences, and that’s why the government doesn’t like the idea of cutting spending, because we become so addicted to it.
There are many companies now that rely on government funding.
They rely on government spending, and if the government were to turn that contract off, that spending off, people would lose their jobs.
People wouldn’t be able to pay for their mortgages, they wouldn’t be able to pay for their cars, and that’s going to cause a big economic pain, because the largest spender in our economy is not you or me or Amazon or Jeff Bezos, it is the United States government.
There are a lot of people who have become very reliant on this government spending, even though the government is spending money that they don’t have.
But we become very reliant as an economy that we need the government to keep spending money, because when you look at our economic growth, which is measured through a number called GDP, well, GDP includes government spending.
When the government wants to make it seem like the economy is growing quickly, they can just spend money, boost the GDP, because government spending is included in GDP.
The first problem is that cutting spending causes economic pain.
The other solution is that the government can generate more revenue. Well, how does the government generate revenue?
Tax dollars from taxpayers, which means the government could create more taxes or raise your taxes, which again has a pain and a consequence. People are already paying many different types of taxes.
- You have your income tax,
- You have your Social Security and Medicare taxes,
- You have your property taxes,
- You have your capital gains taxes,
- You have your sales taxes,
- You have your state taxes,
- You have your tariff taxes,
- You have your state and local taxes,
- Then you have the other taxes, which are things like cigarette and alcohol taxes, many different types of taxes.
Already, the largest expense for many Americans is taxes, when you factor in all the taxes that you have to pay.
And so when people think about, well, let’s just raise taxes to fix the problem, there’s a consequence, because that means people have less money to spend if they have to pay more taxes to the government.
Now the alternative solution that some people like to believe is that if you can lower taxes, businesses can grow their profits, hire more people, which is going to grow the GDP, grow the economy, which will ultimately lead more more tax dollars for the government, because that means more people have jobs, more people are going to pay payroll taxes, businesses are going to make bigger profits, which means bigger corporate taxes.
So there are two ways to look at those taxes: either we let the economy grow, and a bigger economy means more taxes, or we raise taxes, and then people just have to find a way to pay more taxes.
But in any case, this is why no government wants to do anything to actually reduce this debt problem, because, if you were to cut spending, somebody’s going to lose a job, that’s going to hurt the economy.
If you raise taxes, somebody’s going to be angry, somebody’s going to lose that spending ability, which brings us.
What does all this mean to you during a time when now interest expenses are the fastest growing expense for the government, and we’re getting closer and closer to the point where the government is going to need to finance paying back these interest payments?
Well, what this means is it has concerns for the value of the dollar, period, because if the government keeps spending money that they don’t have, this money is being spent in the form of dollars.
And dollars are known as a fiat currency, and a fiat currency means essentially that it is a government-issued, quote-unquote money.
Quote unquote money, because when you get into the technicalities of what money is, you shouldn’t be able to just print more money like gold.
Gold is considered hard money. Why? Because you can’t just print more gold.
It takes time, effort, and labor to mine more gold.
There’s a limited supply of gold in the world, but with these paper dollars, you can push a button and create more.
It costs about 12 cents to print a $100 bill.
You can print these $100 bills all day long, but you’re not actually producing more wealth.
When we live in a system where no president is going to want to induce a recession, because it’s going to create pain, although it could help the value of the dollar over the long term, it means that the value of the currency gets hurt.
If the balance of the currency is getting hurt, you want to own something that can protect you against the devaluation of that currency.
This is where a diversified asset portfolio becomes very important. Now hear what I’m saying very carefully, this doesn’t mean that assets all go straight up.
We go through booms, we go through busts, we go through recessions, we go through economic booms, and every asset goes through asset cycles.
- We see real estate cycles,
- We see stock cycles,
- We’ve seen gold cycles.
Every single asset goes up and down. They all don’t go up and down at the same time, but they all go through cycles.
But what we know is that over the long run, asset prices, especially good asset prices, tend to go up.
And so what you want to do is not be the person who is just working for a salary, who is saving money.
You want to have savings to protect you against an emergency, but just working to save is never going to allow you to build wealth in this system, because you are now fighting the Federal Reserve Bank.
You are fighting the government spending, you are fighting inflation, because those things are going to continue happening.
We’re not going to see government spending stop. We’re not going to see the Federal Reserve Bank stopping printing money anytime soon.
If these things are going to continue happening, the value of your dollars is going to continue dropping.
If your savings are only growing by one, two, or even 3% a year, your savings are slowly making you poorer, because they’re not growing fast enough to keep up with the growing cost of living.
And the cost of living has to keep going up, because the currency that you’re using to buy stuff keeps losing value.
I’m not saying you shouldn’t save any money. You should have savings. You want to have cash savings to protect you against an emergency, but you also want to own a diversified portfolio of assets.
I say this in this way, because many times people assume that you just got to make one investment in one stock and that’s all you need to do to build wealth, when in reality, you want to own stocks, you want to own real estate, you want to own gold, maybe some crypto, maybe some startups.
You don’t have to own it all today, but the goal should be to own different types of assets.
That way, no matter what happens in the economy, you can be protected, but also find opportunities, because there’s going to be times when it’s better to buy certain stocks.
There are going to be times when there are better opportunities in real estate.
There’s going to be times where there’s a better opportunity in whatever asset class, and you want to be able to capitalize on whatever is happening in the economy, because anytime changes happen in the economy or money, somebody’s going to become wealthier.
And I want you to be one of those people.
This Article In Originally Published On Medium.
