Record-Breaking: U.S. National Debt Soars to $33 Trillion Amidst Surging Interest Rates

The United States continues to grapple with its formidable debt crisis, which is being exacerbated by a surge in interest rates, further straining the nation’s economy. Consequently, the national debt in the United States has surged to unprecedented levels.

In a historic milestone, the total U.S. federal debt has breached the $33 trillion mark, as reported by The Kobeissi Letter on September 19.

National Debt Soars

Maya MacGuineas, President of the Committee for a Responsible Federal Budget, remarked, “The United States has hit a new milestone that no one will be proud of: our gross national debt just surpassed $33 trillion.” The Kobeissi Letter added that the U.S. government has been accumulating debt at a staggering rate of $1 trillion per month since the onset of the debt ceiling “crisis.”

On June 3, President Joe Biden signed legislation removing the multi-trillion-dollar debt ceiling, permitting the accrual of even more debt. Moreover, the debt ceiling remains uncapped until January 2025.

During the past five years, the United States has accumulated a whopping $11.5 trillion in debt, while concurrently facing the prospect of annual interest expenses totaling $1 trillion, according to The Kobeissi Letter. The looming question posed is, “How can this situation possibly end well?”

US national debt. Source: X/@KobeissiLetter

At the current trajectory, the U.S. will surpass the $50 trillion debt mark well before the end of this decade. The real-time U.S. debt clock website currently pegs the figure at $33.04 trillion, dwarfing the entire cryptocurrency market’s worth of $1.1 trillion. The counter predicts a national debt figure of $45 trillion by 2027.

Furthermore, the U.S. federal debt-to-GDP ratio presently stands at 122.4%, as indicated by the debt clock.

Despite these alarming figures, Treasury Secretary Janet Yellen appears relatively unfazed. She told CNBC that she primarily assesses the fiscal course by examining “net interest as a share of GDP.” This metric gauges the federal government’s net payments on its debt relative to the gross domestic product.

In stark contrast, Mark Spitznagel, founder of hedge fund Universa Investments, issued a stark warning, asserting that we are currently embroiled in the “greatest credit bubble in human history.” He emphasized, “We’ve never seen anything like this level of total debt and leverage in the system. It’s an experiment,” before adding, “But we know that credit bubbles have to pop. We don’t know when, but we know they have to.”

Skyrocketing Interest Payments

Government expenditures on interest payments have reached nearly $1 trillion by the end of the second quarter, according to the St. Louis Fed’s data. Over the past three years, government interest payments have nearly doubled.

Federal government expenditures, interest payments. Source: St. Louis Fed

Recent reports also highlight the substantial impact of rising interest rates, which currently stand at 5.5%, on personal interest payments. In July, personal interest payments reached a staggering $506 billion, marking an astonishing 80% increase since 2021.

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