US Debt Crisis: Interest Payments Are Becoming a Major Problem

[00:02] it currently stands. And this comes from the US government's website at So, the US federal government is now in debt by a record high of 39.3 trillion dollars. And a good question is how

[00:14] quickly is the government's debt growing? So, the US government runs on a fiscal year. So, if something runs from January 1st to December 31st, that's a calendar year. So, the government runs on a

[00:26] fiscal year from October 1st to September 30th. So, fiscal year 2026 is going to be over on September 30th of 2026. So far into this fiscal year, fiscal year 2026, the US government has gone

[00:40] deeper into debt by 1.25 trillion dollars. Okay, so why has the government gone deeper into debt by 1.25 trillion straightforward. So, I want to show you what happened last year in fiscal year

[00:54] 2025. So, in fiscal year 2025, the government spent 7 trillion dollars. And did the government bring in 7 trillion dollars? In other words, did the government have tax revenue of 7 trillion dollars?

[01:09] And the answer is no. The government had revenue or tax collections of 5.23 trillion dollars. Okay, so how do you spend 7 trillion dollars if you're only bringing in 5.23 trillion?

[01:22] You You're either going to print the money, which devalues the currency and borrow the money. You're going to borrow the difference. So, in this specific fiscal budgeting situation, they are borrowing the money.

[01:35] Last year, the government brought in 5.23 trillion dollars and they spent 7 trillion, right? And they funded this overspending by borrowing 1.78 trillion dollars. So, the difference is the deficits or the debts that accumulates.

[01:52] So, here are the annual deficits over the past 25 years. Again, last year, fiscal year 2025, the deficit was 1.78 trillion dollars. And there's a few things that I want to point out. If you take a look at 2001, the government was

[02:06] actually fiscally responsible. The government spends less than it brought in and they were actually at a surplus. So, it is possible to balance the budget. But now, I mean, this is just my opinion. We've

[02:19] there's no chance of balancing the budget anymore. Another thing that I want to point out is that these two years saw record deficits because of all the pandemic. But notice, after that, the trend is

[02:33] still clearly going up. I mean, this chart goes up to 2025 yet. However, let's take a look at how we're doing so far this year in fiscal year 2026.

[02:46] So, here's where we currently stand. And I would ignore that green line since that That was the outlier year from the pandemic, 2021. Now, the red line represents fiscal year 2026 and we're at a deficit of 1.25 trillion dollars so

[03:01] And if you want to compare how we're doing so far this year, you'll see that the deficit is slightly less compared to 2025, which is good. But it's slightly worse than 2023 and 2024. So, it's expected that we're going to

[03:17] end the year at a deficit of around 1.8 trillion dollars, which is going to be comparable to last fiscal year. Which means that the US government will Which means that the US government will be in debt by 40 trillion dollars around

[03:30] So, maybe it's going to happen in September, maybe early November, but we're going to cross that 40 trillion dollar milestone this year. Now, a very good question is, what is all this money being spent on?

[03:43] So far into this fiscal year, the government has spent 4.9 trillion that money going? So, this is from the government's website. The number one expense is social security payments.

[03:56] The second largest expense for the US government is the interest that they're paying on their debt. close to $40 trillion of debt. The government is spending more on their

[04:08] interest payments than on Medicare, than on health care, than on national I mean, that's how bad the situation is regarding interest expense, regarding Okay, now let me tell you about the problem. The US government borrows money

[04:22] by selling treasury bills, treasury notes, and treasury bonds. So, they're basically selling IOUs to investors, which can be people, institutions, or other countries. Now, if you want to borrow a ton of

[04:36] money, such as $40 trillion worth, then you need to sell more US treasuries, Now, the problem is that there might not be enough demand out there from the Because again, that's I mean, you're talking about a huge quantity of money.

[04:51] So, in order to motivate people to buy US treasuries, which is essentially lending money to the US government, the interest rate needs to be higher. So, for example, if the government wants to pay you an interest rate of 3% for

[05:05] lending money to them, maybe they can sell $5 trillion worth of going to need more money than that, right? So, the interest rate needs to go higher to let's just say

[05:17] 4% to get more investors. And if that's not enough, then they're going to have it will have to go higher to let's just say 5%. And as you can see over the past 5 years, the interest rate on US treasury

[05:30] bonds has shot up significantly. And this is simply a function of supply and this. This shows how much the US government has been paying in interest for the past 7 years. And each year, you know,

[05:44] unsurprisingly, it's been more than the previous year. So, that's simply due to having more debts and higher interest rates. So, here's the interest expense by years. 2020 was at 345 billion. 2021, 352

[05:59] billion. 2022, 475 billion dollars. 2023, 659 billion. 2024, 882 billion.

[06:11] 2024, 882 billion. 2025, 970 billion dollars being paid for And look at where we currently stand for fiscal year 2026. We're paying more in interest expense compared to 2025. So, it's going to be above a trillion

[06:26] So, I want you to keep in mind that the government will collect about 5 trillion dollars in tax collections and 1 trillion of that's going to go towards paying the interest. That's not even paying down the debts. I

[06:39] mean, we're talking about just paying the interest. So, that's a problem. second largest expense of the US government's. So, up until May, they've already spent 723 billion

[06:51] dollars in interest expense. And here's the projection of how much the interest expense is going to grow over the coming years. In my opinion, this is a a good scenario if nothing goes like

[07:05] However, this is just a projection and it's my opinion that it's going to be you know, as you can tell, we're just jumping from one emergency to another, So, listen, I just want to say that doesn't take a mathematician to

[07:19] understand that these numbers don't work out and it's going to it's going to end badly. So, our country's going to run into some major fiscal and monetary problems and what's that going to result in? Societal problems, civil unrest.

[07:33] your sake and also for the sake of your Okay, so what is the solution to this debt crisis? And we have some options So, we could either balance the budget and pay down the debts, we could print

[07:46] the money, we could default on the debts, we can try to outgrow the debts, or have a currency resets. Now, is it possible to debts? And my answer is yes, of course it's possible as I showed you, it's been

[08:01] done before. However, balancing the budget and paying down debt is deeply unpopular politically. So, what kind of saying, "We're going to cut your social security payments, we're going to offer

[08:13] you fewer programs, and we're going to raise your taxes?" You know, will a president get elected based on that type of campaign? And of opinion that that's not going to happen. I'm just being honest.

[08:26] So, you know what people vote for? You know what people like? Free money. You know, that's what gets the votes. So, balancing the budget and paying down the debts, in my opinion, it's just not going to happen. Now, if you want to go

[08:38] down this path, just print the money, you know what happens. We've all lived through it. We get massive inflation. And the newly printed money, it's not distributed equally to Americans. The rich end up with most of it, and then

[08:51] the wealth gap expands, leading to more societal problems. And of course, on the debts. So, the government could say, "You lent us money. Well, we're not

[09:04] broke." Now, this scenario would just be chaotic. Interest rates would skyrocket, prices would skyrocket, inflation would skyrocket, and then there would be massive job losses. It would basically

[09:18] be like an economic depression. So, they can't even entertain this option. So, currently, the US government is selecting option number four as the debts. So, if the US government can improve the

[09:32] economy by becoming the dominant leader in AI, if we can bring back manufacturing to the states, if we can massively grow the economy, dangerous.

[09:45] But the question is, of course, will we succeed? And if we succeed, will it be So, all I can tell you is that currently the money supply and debts is growing at a faster rate than the economy. But if all else fails and the currency

[10:00] with the last remaining option, which is a currency reset. So, currency reset is when a government fundamentally changes the monetary Now, personally, I believe that the safest place to hide your hard-earned

[10:15] money, to preserve your wealth, is in the stock market and also hard assets the stock market and also hard assets such as gold, silver, real estate. Okay, so why do I say the stock markets? Like, if you think about it, what are

[10:28] stocks? Stocks are ownership in real-life businesses, which are assets. So, as the currency debases, hard assets and business valuations, they're going talking about denominating them in US

[10:42] So, in my opinion, like, you don't want to be in cash, you don't want to be in inflation. Like, you're truly going to be losing purchasing power. Now, if you of this, come join my investing community. So, I'm going to leave a link

[10:57] Please subscribe and I wish you a very nice day. Take care.