Reflections on U.S. Debt Through the Years
Back in 1989, a history teacher of mine asked our class to identify what we thought was the key problem facing the United States. We submitted our answers anonymously, and I remember when he read mine—“Federal Debt”—he rolled his eyes, as if my answer was absurd.
At that time, I didn’t simply think debt was bad. I had chosen it because it seemed like elected officials were already acting as if deficit spending was inconsequential, with no real accountability for it.
The more the Fed prints, the weaker the dollar becomes. It’s almost ironic; the weaker the dollar, the more the global community grows suspicious of it.
Fast forward nearly 40 years, and honestly, nothing has changed. Problems that go unaddressed tend to grow rather than shrink.
In 1989, the budget deficit was around $153 billion. Today, the national debt stands at approximately $2.86 trillion.
By 2024, estimates suggest the annual deficit could reach about $1.8 trillion while total debt might hit around 35 trillion dollars. Currently, interest payments are consuming 3% of GDP, and they’re only expected to rise. To complicate things further, the nation faces what amounts to $210 trillion in unfunded liabilities, predominantly from Social Security and Medicare.
Simply put, America is in financial peril. Yet, it seems like many people act as if it’s not a pressing concern.
Ignoring the Warning Signs
The federal government recently experienced a shutdown lasting three weeks. Interestingly, Republicans advocate for more spending while Democrats aim to increase expenditures even further. The truth is, both sides are ignoring a critical reality—we are bankrupt. And yet, it seems to evade public concern.
Congress hasn’t passed an actual budget since 1996. Instead, for almost three decades now, funding has been secured through “continuing resolutions,” which merely extend previous spending plans, layering new costs on top of the old. What begins as “temporary” spending often becomes permanent.
Take the $831 billion stimulus package from 2009, for instance—it’s still in effect. Then we have the $4.6 trillion associated with COVID-19 “relief”—also never receded. Numerous supposed “emergency” expenditures have quietly morphed into standard federal costs.
Every passing year, Washington leaves the faucet running, allowing debt to surge.
By 2024, the U.S. GDP could reach around $29.2 trillion, and this federal debt may balloon to around 35 trillion dollars. This results in a debt-to-GDP ratio of 123%. Still, Washington continues to spend freely, as if being able to print money is a solution.
The indifference among Americans toward this looming issue is quite striking.
Global Perspective on U.S. Fiscal Health
The international community is taking note as well.
To cover deficits, the U.S. Treasury sells bonds, inviting investors to buy debt securities with a promise of repayment. However, these bond auctions have been facing challenges lately. Interest in U.S. debt is dwindling.
As one financial analysis puts it, “With the declining fiscal situation in the U.S., demand will likely wane, raising concerns about future market stability.”
Another report warns that the ongoing $2 trillion deficit raises “critical questions” regarding economic stability during times of recession or war.
When investor confidence falters, the Federal Reserve compensates by printing more money to purchase this debt—this, in turn, fuels inflation, a problem we are already facing. Since the U.S. shifted away from the gold standard in 1971, inflation has eroded 87% of the dollar’s value.
The cycle is troubling: the more the Fed prints, the weaker the dollar becomes, leading to increased wariness from global markets.
The Dollar’s Fragile Status
The dollar’s only remaining strength is its position as the world’s primary currency, a status linked to global trade and central bank assets since 1944. This unique position enables America to continue spending beyond its means. However, that illusion won’t endure forever.
Moreover, BRICS nations—Brazil, Russia, India, China, and South Africa—are increasingly questioning the dollar’s supremacy. Countries including Iran, Egypt, and the UAE have joined this movement, with Saudi Arabia, a major oil player, expressing interest as well. More than 40 countries are now involved.
As Business Insider notes, “BRICS is consolidating its global influence, which should raise alarms for the U.S. as its de-dollarization efforts gain traction.”
So how does Washington respond? Should they consider reducing spending or tightening the monetary supply? Of course not.
Instead, the government opts for saber-rattling. The recent former president, Donald Trump, threatened tariffs if BRICS countries attempted to undermine the dollar, as if to negate years of reckless spending.
Despite being in financial distress, America continues to act otherwise. Washington resembles someone intoxicated, persistently ordering drinks with an expired credit card. The world is beginning to decipher that bluff.
And the American populace? They seem to be sleepwalking through it all, just as they have for many years.
