Global debt has reached an all time high of $313Tn. This week, US total debt reached $25.225Tn, an all time high as well. Just over the last 30 days, it has increased by $225Bn. With that increase in debt, as you can see in the chart below, comes an increase in interest payments. And due to the fact that interest rates have increased and remained elevated since 2022, now interest payments are 12% of government spending. On top of that, since the Fed owns bonds bought when rates were basically zero, and now those bonds are underwater, there are no more annual “reimbursements” to the U.S. Treasury, and that’s why the yellow part of the chart is now on top of the black line. And it will remain there for some time. The continued increase in US debt is putting pressure on the country’s balance sheet and income statement, and although it is still manageable, the trend is incredibly worrysome. And looking at Congress and both presidential candidates, it does not look like the trend is going to pause or reverse, it might accelerate. High levels of debt impair economic growth, lead to downgrades, at some point, force austerity.
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