- The US national debt has surpassed $40 trillion for the first time, marking a roughly one-third increase in less than five years amid historically wide federal budget deficits.
- Treasury Secretary Scott Bessent intervened in government bond markets to combat soaring yields, selling euros and promising to buy long-dated bonds.
- The 30-year yields have risen to levels last seen before the 2008 financial crisis, and by Friday afternoon, yields are rising again while the dollar slides.
- In August 2016, the total national debt was just below $20 trillion, highlighting the rapid increase in debt levels over the past few years.
- The US population is roughly 343 million, meaning the total national debt of $40 trillion comes out to about $117,000 per American.
- The US debt-to-GDP ratio is at roughly 123%, near a record high, with the only countries having higher ratios being Japan, Singapore, and several others.
The US national debt has reached a staggering $40 trillion, reflecting a one-third increase in less than five years, driven by persistent federal budget deficits.17
Treasury Secretary Scott Bessent acknowledged the milestone, stating, "Look, there’s nothing magic about that $40tn number," during a recent interview.23
Despite his calm demeanor, Bessent's intervention in the bond market, which included buying long-dated bonds to lower yields, has not quelled fears of a looming debt crisis.
The 30-year bond yields have surged to levels not seen since before the 2008 financial crisis, prompting concerns about inflation and the dollar's status as a reserve currency. Economist Barry Eichengreen noted, "The bottom line is that Washington, fearing the consequences for US financial markets, is reluctant to see foreign central banks use their dollar reserves."45
The national debt is increasing at an alarming rate, adding nearly $7 billion each day, according to the Peter G. Peterson Foundation. If the US were to pay down $1 billion daily, it would take nearly 110 years to eliminate the debt.
With the Congressional Budget Office projecting debt to rise to 175% of GDP in 30 years without significant policy changes, experts warn of dire economic repercussions.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, stated, "Unsustainable borrowing on this scale has huge repercussions throughout the economy, straining efforts to address affordability and risking a dangerous debt spiral if lawmakers don't act."
“The debt adds nearly $7 billion daily, and at $40 trillion it equals about $117,000 per American. Treasury Secretary Scott Bessent's intervention, which involved selling euros, was seen as a sign of weakness, with 30-year yields reaching levels last seen before the 2008 crisis.”
The Guardian
