The debt burden of the United States is spiraling at an alarming rate, with an astonishing increase of about $1 trillion occurring nearly every 100 days.
According to data from the U.S. Department of the Treasury, the nation’s debt crossed the $34 trillion mark permanently on January 4, following a brief breach on December 29. This marks a significant escalation from $33 trillion on September 15, 2023, and $32 trillion on June 15, 2023, indicating an accelerated pace of growth. Previously, the journey from $31 trillion to $32 trillion took approximately eight months.
The U.S. debt, which represents the amount of money borrowed by the federal government to cover operating expenses, currently stands at nearly $34.4 billion as of Wednesday. Bank of America investment strategist Michael Hartnett predicts that the pattern of a $1 trillion increase every 100 days will persist, projecting the transition from $34 trillion to $35 trillion.
Hartnett highlighted the implications of this debt surge, noting, “Little wonder ‘debt debasement’ trades closing in on all-time highs, i.e., gold $2077/oz, bitcoin $67734,” in a note Thursday.
As per recent data, spot gold is trading around $2,084 an ounce, while bitcoin was recently valued at approximately $61,443. Despite a slight pullback, bitcoin closed February with its best performance since 2020, briefly surpassing $64,000 on Wednesday. Inflows into cryptocurrency funds are on track for a remarkable year, with an annualized inflow of $44.7 billion recorded so far, according to Hartnett.
However, Moody’s Investors Service expressed concern about the rising risks to the fiscal strength of the U.S. government. In November, Moody’s lowered its ratings outlook on the U.S. government from stable to negative.
“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues,” the agency cautioned, “Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”
As the U.S. grapples with its escalating debt burden, policymakers face mounting pressure to implement measures to stabilize the economy and address the underlying fiscal challenges.
