Quick Bite | US Government Debt Reaches Record Highs

US Government debt has recently reached a record high of USD 33.5 trillion, largely accelerated by the pandemic. In fact, research conducted by Win Smart found that over 80% of all US money creation took place between 2020 and 2023.

Historically, significant increases in US government debt levels were fuelled by crisis events such as wars or the Great Depression. However, today it is largely driven by structural changes such as an ageing population, rising healthcare costs and inadequate tax revenues.

When the trend of interest rates is heading lower, as they have over the past 20 years, rising debt levels aren’t as big a problem. But, when they are rapidly increasing as they have over the past 24 months, and are expected to remain higher for longer, it becomes a serious issue.

The consequence? Over the past year, the interest expense on US public debt has risen by USD 883 billion!

Source: Charlie Biello


If rates continue to rise at the current pace, the US interest expense on public debt will soon outpace the estimated Social Security Benefit paid per annum at USD 1.4 trillion, leading to potential implications of higher taxes or inflation to try and reduce the fiscal burden.



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