US Adds $4 Trillion Debt Per Year

The growth of public debt is unsustainable, and there are no good ways to reverse it.

What is the endgame for US debt?

The US continues to add to its $34 trillion public debt pile at a dizzying rate, and the pace is only accelerating. At present, another trillion dollars is added every three to four months, meaning that the debt grows by up to $4 trillion each year.

CFO Robert Sterling, who created the above chart, comments that the rate of growth has increased dramatically since 20 years ago.

"The acceleration started under George W. Bush. Bush went into 2002 with less than $6T of debt. Thanks to GWOT military spending and tax cuts we probably couldn’t afford, $6T grew to $7T in 23 months, $8T in another 21 months, and $9T in 23 months. Then the Great Recession hit. We added the next trillion in 13 months, crossing $10T for the first time in American history. And we haven’t looked back since. During the second Obama term, with spending reined in by the Tea Party movement, annual deficits reduced to less than $1T, and growth in the debt slowed down. At the end of Obama’s tenure, it took nearly 20 months to go from $19T to $20T."

Things only got worse under Trump (who, as a real estate developer, understands the power of leverage). COVID turbocharged an existing trend. Biden has not reversed or even slowed the accumulation of debt, though: This is a problem to which both parties have enthusiastically contributed.

The explosion of debt has been the only bipartisan phenomenon of my lifetime. For us conservatives, we can’t blame it on just Biden and Obama. For you Democrats, you can’t put this on just Trump. It’s both parties, all presidents, and every Congress.

This Is Why We Bitcoin

As Sterling writes, "This is what it looks like when a country is heading toward a financial precipice." There is no turning back, since there are no good solutions to this kind of debt growth. Paying down the debt can only be done in ways that are politically unpalatable:

  • Higher taxes and lower public spending
  • Letting inflation run hot to decrease the real-terms value of the debt
  • Outright default

Of these, inflation is probably the only viable option, and there is a fine line between keeping it high enough to reduce the real-terms debt, and angering the population to the point of extreme action.

Coinbase CEO Brian Armstrong replied, "This is (in part) why Bitcoin matters. It’s a return to the gold standard that we left fully in 1971. A return to financial discipline. Bitcoin will be an important check and balance on excessive deficit spending which is essential to the U.S. and the dollar remaining strong."

The question is who will adopt Bitcoin as an insurance policy: Individuals, corporations, or even the government itself.

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