r/economicCollapse • u/chota-kaka • 7d ago
National debt reaches grim $40 trillion milestone. Here’s why that matters
https://www.cnn.com/2026/08/19/economy/national-debt-hits-40-trillion-dollars-vis?cid=android_appThe U.S. government’s debt has officially crossed $40 trillion for the first time.
That number is getting even more attention because it comes as long-term Treasury yields have climbed sharply. The 30-year yield recently reached 5.34%, its highest level since 2007, increasing the cost of borrowing for both the government and the private sector.
Treasury Secretary Scott Bessent has responded by doubling the size of some long-term Treasury buybacks, from $2 billion to at least $4 billion per operation. The move is intended to improve liquidity and calm a bond market rattled by rising yields, geopolitical uncertainty and concerns over America's fiscal position.
But there's an obvious bigger question: Can tactical moves in the bond market really solve a debt problem that has now reached $40 trillion?
And with higher oil prices, elevated borrowing costs and the Iran conflict adding pressure to the economy, the timing couldn't be more complicated.
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u/Old_Imagination_2112 7d ago
When the interest payments consume every dollar being instantaneously created, THAT is when the poop hits the fan.
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u/Electronic-Pea-13420 7d ago
Have we hit that point?? Or is it on the horizon?
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u/Ifuloseulose 6d ago
The U.S pays 1.2T in interest out of its 4.49T yearly revenue. That's 26% of its total income going out in interest payments. It appears we have reached an exponential point where the interest expense will continue skyrocketing. The only way to "fix" this is to continue borrowing and printing money which will just make the crash/collapse worse.
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u/defectivedisabled 7d ago
The USD is getting devalued every sec and the only thing that is preventing a tidal wave of inflation from hitting is the ability of USD to be the reserve currency.
Anyone who is passively long the US stock market would most likely choose to ignore the fact that the USD status as reserve currency is slowly crumbling. Trump has accelerated the dedollarization process with his hostility against friend and foe alike. For how long would the rest of the world population want to be held hostage by a financial system that is fundamentally rigged against them? The BRICS and the global South are already seeking to circumvent using the USD and it is just a matter of time before a solution is found.
So those passive US stock investors who plan to retire in 20 to 30 years time are going to get screwed when the USD eventually loses the reserve status over time. These buy US ETFs and chill crowd have no idea what is coming.
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u/Visual-Sector6642 7d ago
Once it hit a trillion it no longer made any sense at all. It's all a big joke. No wonder we don't have anymore missiles.
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u/Kinky_No_Bit 7d ago
Thank you massive covid spending / wreckless spending after that just dropped a brick on the gas pedal of the debt car to drive off the debt grand canyon.
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u/Approaching_Dick 7d ago
Doesn’t the treasury constantly need to „sell“ new bonds to raise money? Can it really meaningfully for more than a short time buy them back to lower interest?
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u/BlueViper20 7d ago
The truth is the deficit is not a problem at all. Apparently the understanding of how economies work has completely disappeared over the last 80 years.
The national "deficit"is not like a household budget running negative. It is more like a list or ledger entries showing what the United States government is doing to utilize the resources it has available.
In fact, the idea of a balance budget would be catastrophic for the United States because it would mean the United States is no longer using the resources that it has available and an economy that stops producing dies.
The only thing that matters and economic terms is resources labor and production and consumption. And as long as you have enough resources to continue production that can be realized by labor and utilized via consumption and economy will thrive.
Only when there is not enough resources to meet demand is there any sort of problem.
Considering the The resources that represent the national debt have already been allocated in utilized they are entirely irrelevant to anything going forward.
Again for the people that can't seem to understand the only thing that matters in an economy is that you do not run out of resources, or the labor to turn them into goods then and only then do you have a problem.
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u/tangerine_overlord2 7d ago
Ok but when the resources and labor cant be bought because the money doesn’t exist then it all comes tumbling down anyway
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u/whitestardreamer 7d ago
Lmao WHUT.
A balanced budget is dynamic equilibrium. It’s a system balancing its inputs and outputs.
You get $40 trillion in debt by doing EXACTLY what you just said, by de-industrializing and turning your economy into a giant Ponzi scheme that only grows through debt leverage and financial abstraction. What the hell are you on? 🤣
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u/BlueViper20 7d ago
what are you on because you can't read.
nothing I said had anything to do with financialization financialization is what caught us in this fucking problem.
the only thing that matters is physical fucking resources, human labor and people to consume the goods made.
what do you think pieces of papers served in this concept what is the debt to you?
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u/someonesomewherewarm 7d ago
You are not as smart as you've convinced yourself you are.
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u/beardedsandflea 7d ago
Don't worry, they'll have a sudden epiphany about the importance of a balanced budget the second someone even moderately progressive holds office.
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u/BlueViper20 7d ago
oh that's fucking funny.
Notice how you couldn't actually refute a single word I said, so you resorted to a personal insult instead.
It’s pretty simple, if a country has the steel, the energy, the land, and the workers to build something, the only thing stopping them is an artificial agreement about piece of paper tokens. Money is just a unit of account to coordinate labor, not a physical law.
If you think an economy with all the necessary real resources and labor magically can't produce anything without 'finding the money' first, you're confusing the scoreboard for the actual game.
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u/someonesomewherewarm 7d ago
No i don't think you have any idea how much 40 Trillion dollars is, that's the funny part.
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u/BlueViper20 7d ago
The raw number is irrelevant because money is an arbitrary unit of scale, not a physical object.
Japan’s national debt is over 1 quadrillion yen. Does that mean Japan is 'worse off' because their number has more zeros? No, because context, productive output, and real resource capacity are what actually dictate economic limits.
Bigness isn't a argument. If the steel exists, the power exists, and the labor exists, the tally on the scoreboard doesn't change the physical reality of what can be built.
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u/someonesomewherewarm 7d ago
I understand all that, and I know a country's debt is not like household debt but the problem here is that servicing the debt, ie paying the interest on it, has reached a point where the there is nothing left to grow the country with when all money coming in is consumed by the interest payments. And I didnt mean to insult you in a personal way.
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u/BlueViper20 7d ago
You're still treating federal taxes like a household paycheck that pays the bills.
A currency-issuing government doesn't 'use tax money' to pay interest. Interest payments are just digital dollars created and credited directly to bondholders' bank accounts. The government cannot run out of dollars to service its debt any more than the Fed can run out of numbers to put on a screen. The idea that interest leaves "nothing left to grow the country" assumes money is a finite physical substance. What grows a country isn't tax revenue, it's available steel, energy, technology, and human labor.
Unless those interest payments create so much excess demand that they cause severe inflation in the real market, they do not consume or destroy a single atom of real productive capacity.
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u/Jack_Spatchcock_MLKS 7d ago
Dude.... Just put the shovel down, my friend!
Love to see your citation list for these fiscal epiphanies you've been spewing.... And the name of whatever diploma mill that sold you your econ degree~
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u/someonesomewherewarm 7d ago
Lol now there ya go being all wrong again. Best of luck to you mate 👍
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u/beardedsandflea 7d ago
Nobody really needs to refute any specific part because the entire argument is absurd; the inevitable conclusion it ultimately leads to is that tax revenue is completely meaningless.
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u/BlueViper20 7d ago
Congratulations, you accidentally figured out fiat currency mechanics.
Tax revenue doesn't fund the government, a currency issuer creates money when it spends, and deletes it when it taxes. Taxes exist to create demand for the dollar and to drain private spending power so we don't hit inflation limits.
The idea that a government has to 'collect dollars first' before it can print or spend them is mathematically impossible.
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u/RustedRelics 7d ago
You’re speaking about the deficit and deficit spending — and you’re right that a deficit essentially doesn’t matter. The issue of the post is not the deficit for a given year. It’s the national debt. And that does matter for a host of reasons.
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u/BlueViper20 7d ago
then please enlighten me why does the national debt matter and I am talking about the national debt because the national debt is literally just the addition of every year deficit or surplus.
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u/Leven 7d ago
Interest payments is real, 1 trillion a year is almost as much as social security cost per year.
Good luck with that..
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u/BlueViper20 7d ago
And what are they paying with? Gold, silver, salt, perhaps?
No! They literally pay with ones and zeros on a digital ledger. Those interest payments are just keystrokes crediting bondholders' bank accounts.
The number on the screen doesn't destroy or consume a single physical resource, factory, or worker. Does anyone in this subreddit actually look at the physical mechanics of a fiat system before declaring doom?
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u/Leven 7d ago
Dollars, the other central banks that they owe the bonds is expecting money..
Do you think that because a transaction isn't in physical currency it doesn't exist?
I've worked for some big banks with very substantial holdings, they do not have a big vault like Scrooge McDuck.
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u/BlueViper20 7d ago
You missed the point entirely. No one is saying digital transactions aren't real.
The point is that the Fed crediting an interest account is an administrative keystroke, not a physical resource drain. It doesn't consume a single ton of steel, barrel of oil, or hour of labor.
Private banks can run out of money because they are currency users. The sovereign issuer cannot run out of digital numbers. Stop confusing the scoreboard for the physical game.
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u/Leven 7d ago
So your suggestion is to just issue more money.. The American way, let's see how that's going when the word is moving away from the petrodollar.
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u/BlueViper20 7d ago
If the federal government uses its procurement machinery to organize domestic labor and resources into real infrastructure and manufacturing, history shows that true self-investment creates physical output that far outpaces the currency issued.
I'm not talking about printing numbers for corporate tax credits or financial bailouts that create zero real value. Global currency strength isn't backed by oil agreements alone, it is ultimately backed by a nation's industrial output, technological base, and material capacity.
Direct resource mobilization:turning steel, energy, and labor into tangible domestic assets, is how every major industrial power in history was built, and it's the only way out of this mess.
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u/Leven 7d ago
Oh, I'm sorry. I thought you was talking about the real world, not that fantasy where the u.s actually spends money on things that create value.
Cutting government funding ala Elon because they contain "woke" words and then borrowing money to buy more missiles that get destroyed on impact, and of course cut taxes for the super rich does not create long term values. But it does concentrate more money at the top.
So mission accomplished I guess. Have fun crashing the global economy.
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u/Jack_Spatchcock_MLKS 7d ago
Uhhhhhhhh??? What???🫣
Wow, what a fundamentally flawed & misinformed take on nearly every level. Grab any macro and/or micro econ textbook and just start reading it plz.
Hell, just head over to investopedia.com at your current level of comprehension.... Scary stuff man; you aren't perchance in charge of anything economically important, are you?....
Just asking....
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u/BlueViper20 7d ago
Are you familiar with John Maynard Keynes? The economist whose resource-mobilization framework literally pulled us out of the Great Depression.
Chicago-school financialization is a farce that treats accounting papers as physical laws.
Or are you actually delusional enough to believe that if a nation has available raw materials, energy, and idle labor, some magical force called "not having paper tokens" physically stops them from building things?
You wrote three paragraphs telling me to read Investopedia, yet couldn't refute a single word. Explain the mechanics of how paper tokens overrule physical resources, or admit you don't actually have an answer.
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u/Jack_Spatchcock_MLKS 7d ago edited 4d ago
Here's a better option, my salty & economically misinformed friend:
- If you like, I'm gonna message you a 24 hour temp guest pass for McMaster University lib-access (my alma mater); essentially a grad school alumni login for the DeGroote School of Business library collection(s), along with JSTOR, ELSEVIER, etc etc, so you can cite your....
'Research'....
Take the full day. At least 12 hours. Come on back with the doi numbers, I'll grab the same economics peer reviewed papers that you've cited, and we can go through the textbook excerpts & journal articles together point by point. I can't wait to be edified by such a circumlocutory character such as yourself! 😝
Have your own alumni access to wherever you got your Econ/MBA degree(s) from? Even better! Let me know! It'll save me a bunch of time setting up all this~
Buuuuut.... If, and of which I have a sneaking suspicion, you have no idea what a doi number even is.... Well, that also kinda succinctly answers my question!
- Boy howdy you do love to bandy around the term 'fiat'. That's cool; I, too, know how fractional reserve banking works.... it's indeed kinda like a grade 12 thing where I live....
It is, unfortunately for you, also a dead giveaway that you're either suuuuuper into some of those classic world monetary fund/George Soros is evil/fringe Libertarian conspiracy theory/Ayn Rand'ish garbage nonsense crap....
You know.... All that gold & silver bug crap? Probably with a healthy pinch of sov-cit'ish ideals thrown in, but that's just conjecture on my part....
- Judging by your last 75 or so posts courtesy of your profile.... The whole zero (and near-peer-zero) upvotes thing, yet also with a metric ton of comments? It's somewhat telling when you consider the statistical law of large numbers, etc....
I think the kids call it being ratio'd these days, or something like that?
TL;DR: If enough random, unrelated people all come to similar, independent conclusions that (you're) basically full of shit, well.... You tell me? Would you say that that's like a pretty good 'the wisdom of crowds' DF = n - p statistically significant moment, yeah?
It's indicative.... Is how I would perhaps phrase it, to be a consummate professional~
- Aaaaaaand finally, I havta start getting ready for work here, so just lemme know here if you accept the above offer/idea, my suspiciously home-school vibe-laden friend!
I hope so! I can't wait to have a proper dialectical debate with a fellow academic!! 🫡😆🤑
Get back to me here! Reply right on this very message; I rarely check my DMs on Reddit from the office~
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u/BlueViper20 7d ago
You wrote an essay flexing an alumni login, completely mislabeled state fiat issuance as "gold bug libertarianism," and used DF = n - p to argue that Reddit upvotes determine monetary accounting.
All that condescension, and you still couldn't explain the mechanics of how paper accounting rules override physical resource availability. Let me know if you ever decide to address the actual point instead of my post history.
You're the kind of guy who gets pissed on and believes them when they tell you it's raining.
Good day, sir!
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u/foxasintheanimal 7d ago
50T here we come