The US is treading a flimsy fiscal line on the verge of snapping as its national debt surpasses $35 trillion. Since its inception, the United States of America has suffered from terribly high debt, owing upwards of $75 million to France and domestic investors during the American Revolutionary War in 1783. In 2024, US national debt has skyrocketed, adding debt equal to 45% of Q2’s 2024 GDP in the last five years.
This is mind-blowing:
US Federal debt just hit another record and is $2.5 billion from reaching $35 trillion for the first time in history.
Since 2019, US Federal debt has skyrocketed by $13 TRILLION.
To put this into perspective, the US has added debt equal to 45% of Q2 2024… pic.twitter.com/N6F0m4gVSQ
— The Kobeissi Letter (@KobeissiLetter) July 28, 2024
The new data from the Treasury Department released on Monday reveals that the US has suffered a fiscal deficit every year since 2001. In 2021, US federal debt amounted to $30 trillion, with recent data indicating debt levels rising at an alarming pace, often outranking GDP. The current gross national debt equates to $104,497 per person and $266,275 per household. According to Jerry Seib, a former executive Washington editor at the Wall Street Journal, “The first one and the most immediate one is that government debt crowds out other investments that might be used to make more useful contributions to the economy.” This traditionally involves investment cuts for strategic domestic sectors and comprises infrastructural developments that sustain any economy. “Money that goes to pay interest on the debt often goes overseas to China, Japan, or India. It’s not being used to invest in the U.S. economy,” Seib adds.
Aside from the initial threat to the economy, insurmountable debt levels cause a direct interest rate hike to tame expenditure. This coupled with rising inflation and a weaker currency could signal an imminent recession. Interestingly, analysts and legislators admit that the current $35 trillion debt “is so large that nobody realistically thinks it can be paid off.”
