Congrats, America 🥂We Made it! Government Debt Spikes past $33 Trillion: +$1.6 Trillion since Debt Ceiling, +$2.2 Trillion from Year Ago

Trillions whooshing by so fast they’re hard to see.

By Wolf Richter for WOLF STREET.

The total US national debt spiked by $1.58 trillion since the debt ceiling was lifted, and by $2.16 trillion from a year ago, to $33.04 trillion, according to the Treasury Department’s figures this afternoon.

A stunning amount of new debt that is getting piled on in a stunningly short amount of time, even as the economy has been growing at decent rates! Congratulations, America 🥂

This $33.03 trillion of debt is composed of two piles of Treasury securities:

$6.8 trillion of nonmarketable Treasury securities. They’re not traded in the market; they’re held by US government pension funds, the Social Security Trust Fund, etc. And a portion of it is held directly by Americans in form of the popular I-bonds and the less popular EE savings bonds. This balance has remained roughly unchanged since the debt ceiling and is up by $210 billion year-over-year.

$26.2 trillion in marketable securities. They’re held and traded by the global public, from regular folks to big funds and financial institutions, including central banks. The Fed is now down to $4.98 trillion, after having unloaded $783 billion under QT.

Marketable securities outstanding have spiked by $1.51 trillion since the debt ceiling was lifted on June 2, a huge amount of additional issuance in three-and-a-half months, and by $1.9 trillion year-over-year.

The average interest rate rose to the highest since 2011. The newly issued Treasury securities to fund the new deficits and to replace maturing securities come with higher interest rates than the securities issued years ago that are now maturing and need to be replaced.

So the average interest rate paid on all interest-bearing Treasury securities rose to 2.92% at the end of August, according to the Treasury Department, the highest average rate since 2011. But wait… since 2011, the debt has more than doubled – it surged by 120% since September 2011.

But this average rate is still cheap, given that T-bills now yield about 5.5%, the two-year yield is over 5.0%, and the 10-year yield is at 4.3%:

This $2.2 trillion added debt over the past 12 months reflects the current tsunami of deficit-spending. Deficit spending is stimulative for the economy, so this is great news for economic growth – if that’s all you look at – but this additional demand also adds fuel to inflation, and the debt pileup is an intractable horror show for the future.

If the government runs those kinds of deficits where the debt spikes by $2.2 trillion in 12 months, what will the debt do if there ever is an economic downturn, when deficits typically blow out further as outlays rise and tax receipts plunge? That was a rhetorical question.

To what extent do interest payments eat up tax revenues? That’s the measure that matters the most. The measure of tax revenues in the chart below – total tax revenues minus contributions to social insurance and some other factors – is what’s available to pay for regular government expenditures, including interest expense. The ratio spiked to 36.2% in Q2 – we discussed this and other factors of the burden of interest payments here.

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  243 comments for “Congrats, America 🥂We Made it! Government Debt Spikes past $33 Trillion: +$1.6 Trillion since Debt Ceiling, +$2.2 Trillion from Year Ago

  1. Gary says:

    The problem is excess productivity:
    “Deficit spending is stimulative for the economy, so this is great news for economic growth… additional demand also adds fuel to inflation.” If you look at real wages versus productivity since the 1970s they are flat with productivity trending greatly up, it’s all that excess wealth produced that is competing with ordinary wages that is causing some economic growth inflation. A substantial lowering of productivity across the board keeps the same wages as they are flat and absorbs all this stimulus money by not producing anything with it. This could be accomplished by not allowing a business tax deduction for capital improvements.

    • Cas127 says:

      “problem is excess productivity”

      Then why has the US been running massive trade deficits with China for 20 years?

      • Realist says:

        The most important chart is the relationship of debt to GDP:
        If we were to compare COVID to WWII then govt deficits should be going down now, but just the opposite is happening.
        = This is an unsustainable situation, that ends with either runaway inflation, or a dramatic cut in govt spending during a recession
        = The potential for one of the worst recessions in history
        Which only happens when Asset prices are so stretched that they collapse during an economic decline, which creates a negative feedback loop.
        Most stock investors are not prepared for either scenario.

        • John H. says:


          Your name says it all…!

          Rough seas ahead.

          Only fly in the ointment is, one (me) could have said the same thing when gross debt hit 100% several years ago. Same rationale.

          Timing of a collapse is a coin flip.

          Good comment, though.

        • phillip jeffreys says:

          Or prolonged STAGFLATION.

    • longstreet says:

      Lower productivity would mean lower supply of goods and services.
      With the influx of government spending and stimulus, this is very inflationary. There would be no absorbing of stimulus money…just more money chasing fewer goods and services due to the productivity drop. IMO

      • Grant says:

        I think you vastly overestimate the amount of jobs in the US workforce that meaningfully contribute to productivity. There’s the usual low-hanging fruit like DEI that gets mentioned, but a lot of clerical work is meaningless. A lot of companies could implement 4 day work weeks with a 20% pay cut for plenty of their clerical positions and suffer no real loss in productivity. I don’t think it’s Pareto numbers bad in terms of makers-to-takers, but it’s certainly higher than most people think. An awful lot of time sheets that get filled out in the US are in the “based on a true story” category when it comes to fiction and nonfiction.

        • Gaston says:

          In your example you are assuming companies are holding fat in clerical position ls by 20% ( a big number). What is the basis for that view? Any studies back that up or just pulled out of thin air?

        • Grant says:


          Don’t need studies. Every company I’ve worked at (including at least one “big 5” consulting firm) has been like this. Informal observation from peers has confirmed this in multiple different industries. We used to call this “common sense.” In the age of peer-reviewed studies on how female hurricanes are deadlier than male ones (Jung et al. (2014) Female hurricanes are deadlier than male hurricanes, PNAS 111:24), I find my own two eyes more instructive than whatever the sociology, business, or even human factors and ergonomics departments in academia are cranking out.

          In my experience, people who think many companies AREN’T carrying a lot of wasted time and energy are the ones who are profoundly out of touch with day-to-day operations in most businesses. I’d be able to accomplish everything I get paid 40 hours a week for in 32 hours or less. I simply prefer the extra 20% pay and I’d never “rat” on myself or provide additional labor for free. And I’m hardly alone and hardly in the bottom 50% of people in any of the companies I’ve worked at. If the company came down and said “It’s 4 day work weeks and an 18% pay reduction,” I’d shrug and consider it a win and find ways to monetize the 8 hours I just got back.

        • Gaston says:

          Grant- I’ll confirm that as well, but I also think if you cut 20% you don’t magically remove the waste.

          Now you just get 20% less done as a human doesn’t work on a weekly basis. They work on a short term (hrs) basis and very few humans can maintain “100%” for the straight 8-10 hours on work day consists of.

          Like companies that think removing internet will remove distractions. People distracted before will now just stare emptily into space or cooler talk will increase.

        • 91B20 1stCav (AUS) says:

          …so how do we eliminate them from the office but retain their individual goods-buying/willingness to soldier value?

          may we all find a better day.

        • Northernlights says:

          The fact that we told almost everyone to stay home in March 2020 and didn’t go Lord of the Flies on each other implies there are a lot of people working on stuff that might not be mission critical!

          All the organizations producing intangible things didn’t matter much when we couldn’t find toilet paper!

        • JimL says:

          How is that not a made up fantasy?

          You have no numbers to back up your assertions. Assertions that are absurd at face value.

          Just answer this question.

          Why do you think companies carry and extra 20% of workers on their payrolls? Do you think capitalistic companies are really secretly charities?

      • phillip jeffreys says:

        Productivity is an efficiency concept. GDP (goods and services) do increase/decrease with productivity increases/decreases – given the omnipresent CATERIS PARIBUS (CP) theoretical white rabbit economists like to pull from black hats. However, goods and services production supply can increase/decrease once that CP constraint is “relaxed” with changes in other factors of production (that are not productivity related). In other words, it’s not an ironclad law of growth.

    • Realist says:

      If govt deficit spending could create “real” stimulation to the economy then Argentina would rule the world….
      The problem is that too many people in this country do not understand that Govt. debt and deficits are “crossing the Rubicon”…
      Fat too few people understand that the end result is even worse than stagflation….
      The end result is what has happened to every economy in history that has run similar policies….
      = Recession and Inflation at the same time.

    • john says:

      Not true…inflation kills any benefit of deficit spending…economics 101: printing money creates inflation, spending money you don’t have (national debt) on programs that don’t stimulate the economy creates inflation. THIS_WILL_NOT_END_WELL.

  2. Logan Dancey says:

    What the hell is the Government spending all this money on???

    • Ryan Merritt says:

      The money is being spent in an effort to keep the wheels on this runaway train attached to the rails and every day that goes by another competent and willing person/organization either walks away, raises their price, decides to become corrupt and steal the money or is replaced with one of the former categories.

      And then welfare, warfare, entitlements & interest on debt.

    • StatisticsJason says:

      A lot of it is going to Ukraine.

      • Wolf Richter says:

        1. That’s a small % in the gigantic US budget.

        2. Most of that is spent in the US on US-made stuff (a plus for jobs and the economy) that is then shipped to Ukraine to be worn out, fired, or destroyed, so that more needs to be built in the US… even better for the US jobs and the economy. That’s how the MIC works.

        • 91B20 1stCav (AUS) says:

          …kinda reminds me of an old conversation about a failed rocket launch, the outrage at ‘money fired off only to be destroyed in space’, and the rejoinder of: “…uhh, i think the money stayed right here on earth…”. (…whether any valuable knowledge resulted from the failure being a different conversation…).

          may we all find a better day.

        • phillip jeffreys says:

          Some disagreement:

          Point one I agree with.

          Point two: it’s entirely possible that much of the “material ” being routed to Ukraine comes from existing inventories globally (older “stuff” other countries previously purchased). Maybe the countries who are clearing inventory transact through other countries that coordinate with US front companies who in turn coordinate with still other US companies for transport, who then coordinate with European governments for storage and subsequent transport – find other nations for newer technologies, or maybe there are shifts in political alliances, etc., etc. Just sayin the current situation might be murkier than meets the eye!

          It’s always possible one furtive objective is depleting domestic supply of specific kinds of goods.

        • phillip jeffreys says:

          Majority of DoD budget is spent on O&M and personnel.

          “More needs to be built” glosses over what’s goin on behind the scenes in Ukraine.

          The MIC takes care of itself…no doubt. And others.

          Go for it!

        • JimL says:

          Also, what people fail to realize is that giving this stuff to Ukraine is great for the U.S. own defense because it keeps our military-industrial base robust.

          For many munitions (HIMARS, 155mm artillery rounds, etc), the industrial base necessary to manufacture a reliable supply of munitions had withered. U.S. stores were filled, our allies stores were filled. Nobody was buying these munitions is large supply. The federal government was buying enough to keep the companies that made this stuff on life support, but barely.

          As a result, if the U.S. had ever gotten into a real shooting war with a near peer adversary, the U.S. would use up it’s stores in a few weeks and then not had the industrial base to continue. If we didn’t win in a few weeks, we would lose because we would be out of ammo.

          Now with the stuff we are giving Ukraine, companies are not only keeping their manufacturing lines going, but are expanding them. If we ever get into a real shooting war, we will be better positioned to fight in a longer conflict. Just Google the monthly domestic production of 155mm shells.

          The money we send to Ukraine is not only the best domestic jobs program we could ever come up with, but it is increasing our own security as well by keeping out military production base humming.

        • Wolf Richter says:

          The money spent on defeating Putin’s invasion of Ukraine is the best money ever spent. He invaded a European country for the second time to take the part he hadn’t taken the first time. What’s next? Poland? And then? The former East Germany? Putin’s military needs to be crushed in Ukraine once and for all. Even the peaceniks in Germany understand that now. And Putin turns out to be a moron that totally miscalculated.

      • Herpderp says:

        they get ~ a half of a percent of the defense budget mostly in old equipment that was already bought and paid for and would otherwise sit and rust from disuse.
        frankly its the best money the DOD has ever spent.

        • Declan says:

          That’s simply untrue.

          US “defense” budget is around $800 billion.

          US aid to Ukraine is currently over $75 billion.

          That’s much more than half a percent, regardless of whether you think it is a good investment.

          Incidentally, Russia’s total military budget is around $100 billion annually, so we are probably outspending them in Ukraine, despite not offiically being party to the conflict.

        • Grant says:

          That’s what is told to the taxpayer, but that’s not true and here are some examples. We gave them a large supply (Center for Strategic International Studies had it pinned at 1/3 of our strategic reserve at 7,000 units in APR2022, wiki says we’re up to 10k+ as of now) of javelin missiles to the point where we’re struggling to resupply our own stores. We currently use javelins and have no plan to replace them in force. A simple perusal of the wiki article on aid to Ukraine by country also shows other complex munition systems provided, many still in use by our military. These take a decent amount of time and labor to produce. They are also significantly expensive and (obviously) don’t have longevity in use unlike small arms or vehicles. We’ve also sent them a lot of mortar and artillery rounds that are in common use while many units in the US have difficulty securing enough ammo to adequately train and certify their gun crews in support units based on current ammo allocations. We also sent them a lot of HMMWV (Humvees) and LTV (Light Tactical Vehicles), all of which are still in active use in both Active Duty, Reserve, and National Guard components. Additionally, the small arms we sent over are almost certainly all still in current use. We weren’t sending M16s M60s, and M14s. M9s and M4s are still issued and will be for the foreseeable future. The rollout of the M17 won’t be complete for another decade and the new rifle systems won’t experience a universal rollout.

          Additionally, a lot of the “obsolete gear” is gear that’s still in service for the National Guard. One of the key tells that a lot of the equipment such as the M1A1 Abrams and the A2 Bradleys we’re sending is that they aren’t 0MEL in the Army property system. This means they’re not obsolete, as all obsolete equipment in the Army has a $0 minimum-expenditure-limit which means the second you need to spend any money on it, you need to turn it in as scrap and wait on a replacement. Think of it like your car being totaled out the second you have to replace windshield wiper blades.

          Also, we can and do sell a lot of this “obsolete” equipment to other nations and recoup some of the costs of replacing them with newer equipment. By giving them away, we’re not defraying any of the costs. Though it’s been called such, the Military Industrial Complex is NOT a self-licking icecream cone. Although, admittedly, if we’re sending equipment to get blown up to generate demand for more equipment, I’d prefer if it weren’t Americans inside the equipment when it’s getting blown up.

        • Lisa Woo says:

          The money and resources could have been spent in other areas (not on another pointless war).

          The US needs to move away from being the worlds policeman. We could save a lot of money scaling back the military.

        • Alex says:

          Right? Ukraine just destroyed two ships in dry dock with about a dozen cruise missiles. They’re getting mostly hand me downs that we would have scrapped anyways. Any amount of equipment we give Ukraine yields a substantial profit in the military destruction of an enemy. Like send them all our shit.

          I don’t get how people don’t see this. We’re sending them artillery shells and missiles. They’re not going on eBay to be sold

        • Kman says:

          I thought I’d heard it all.
          My god.

        • phillip jeffreys says:

          Informed post Grant.

          Bottom line is that no one here, far as we know, has an actual vista into the contracts in play since, say, Feb 2022. In this context, hard to make assertions about what the “stuff” is, where “the stuff” comes from, who the transaction agents are, the path “the stuff” actually traces as it moves from source to destination, what the margins are, what happens to “the stuff” once it arrives at its staging host country, etc., etc. Given the total absence of publicly shared audit information, there is also no insight into possible fraud (and interesting sidebar given the size of alleged mishandling of pandemic funding).

      • JimL says:

        You failed high school math didn’t you?

    • Petunia says:

      They spend money on endlessly studying problems without ever actually fixing them. It would actually be cheaper to just fix the problems but then the bureaucrats would be out of work.

      • James@58 says:

        Excellent observation. NIH, FDA, CDC. A starter list.

      • NoBadCake says:

        They employ people who spend their pay, etc. which enables America’s, stepped, standard of living.

        “Most men would feel insulted if it were proposed to employ them in throwing stones over a wall, and then in throwing them back, merely that they might earn their wages. But many are no more worthily employed now.”
        –Henry David Thoreau, Life Without Principle, 1863

      • Grant says:

        Think about it from their perspective. If they actually fixed the problem, nobody would pay them to fix it again. Never fixing the problem is a source of job security for a lot of these people.

        • 91B20 1stCav (AUS) says:

          …oft-seems many of our efforts get directed at ‘fixing’ (or resisting) aspects of our human nature, subject to its contemporary zeitgeist and planetary realities…

          may we all find a better day.

        • El Katz says:

          It’s like an “American Barfalosis Society”….. whose mission it is to cure “barfalosis”. They’ll never succeed because, if they were to achieve their lofty goal, they would cease to exist.

          What CEO, slurping up $15M a year plus perks, would allow that to happen?

        • phillip jeffreys says:

          I don’t think that’s the core issue.

          My experience has been that there’s greater longevity in constantly redefining the problem. Some of that is inherent to the problem space – changing economic, political and technical landscapes constantly influence the content of future planning. But a lot of it operates in a shorter timeframe that…errrr…..benefits the white collar labor force.

      • Thomas Roberts says:

        We know for sure that most of congress is involved in insider trading. Beyond congress though, one has to wonder, how far down can you be and still receive alot of extra money from insider information? Fixing any of this, would be a very expensive mistake for them.

      • JimL says:

        The reason this happened is because the agencies involved can only study the problems and make recommendations. It generally requires congress to act on the solutions they suggest.

        Unfortunately congress is populated by people who are more interested in political theater and nuttiness than actually governing. They are too busy scaring their political base about Hunter Biden (who has never held a government job), and the rare book in schools (that no one reads) that talks about two daddies, than they are interested in solving actual problems.

      • ChangeMachine says:

        As much as I love to hate bureaucrats and feel they could be improved upon, there’s no such thing as “fixing” war, plague, pestilence or hubris.

    • Brant Lee says:

      C’mon everyone, let’s not get so worked up about numbers and enjoy the ride, because the politicians are. Keep voting them back in. We’ll see 50 tril this decade and sitting here saying OMG.

      The dollar is king. No one is even close. Any other country with the U.S. position would be doing the same thing. Except maybe they would have something to show for blowing so much money.

      We should be proud of all the billionaires this country has produced. We have more millionaires than factory workers. Sorry if you got left out.

    • Imposter says:

      Logan, did you not follow the Shrimp stress tests or read the extremely valuable test results report?

      C’mon man, get yer priorities straight!!

    • Fed Up says:

      Their own salaries and benefits and enriching themselves across the board. The federal government needs a 50 to 75% cut in workforce.

      • JimL says:

        I always hear people say silly stuff like this, but then I remember back to the first time the federal government was shut down and people who rooted for the shutdown were complaining because federal parks were closed because there was no one to empty out the garbage cans and help tourists.

        It is similar to the people during the Obamacare debate who wanted the federal government to keep their hands off of Medicare.

  3. MussSyke says:

    Just wanted to be the first to comment! Looking forward to a good read. Out the wazoo!

    • MussSyke says:

      I do love how this site manages to be essentially apolitical, yet the charts (first one) leave no room for idiots to fantasize that one party is complicit while the other condemns reckless spending.

      • David says:

        Do you expect fiscal spending to keep growing year on year in 2024.? As % of GDP? In real dollars? Or is 2023 the top?

      • roddy6667 says:

        There is only one party in America. And we’re not invited.

        • Cold in the Midwest says:

          Yes. And it must have been one heck of a party considering the magnitude of the hangover. Even the Fed is having trouble cleaning up the mess. A historic spending binge-party that continues to ripple through the economy.

      • Happy1 says:

        The only thing that tends to hold back spending is divided government. But there is one party pushing endless increases in entitlements, and one party pushing relentlessly lower taxes. Best hope is deeply divided scenario.

        • Jiml says:

          Lol you are still funny. 20 hears later.

          Do you remember your absurd arguments that the U.S. had eights to the moon since they planted their flag (despite signing treaties explicitly saying otherwise)?

          Always good for a laugh.

      • kramartini says:

        The actual spending is the result of compromise between the 2 major parties. One is unhappy because the spending is too high while the other is unhappy because it is too low. Neither party is getting what it wants.

        • Bead says:

          And the wealthy truly don’t wish to pay the bribes. Better idea is to work on their virtue signaling.

        • JimL says:

          Why do people only loom at spending? Deficits are the result of an equation that involves revenues minus spending.

          Unfortunately the masses have been brainwashed to think that higher taxes will fall on them rather than the highest of the high earners who currently pay a pitiful amount of their wealth. So the focus is always on the spending rather than the wealthy despite the fact that the spending generally helps the masses.

      • Slickfish says:

        Which party are you talking about? The 7 trillion under Trump is about a 34% hike from where it started when he took office. The 5 trillion under Biden is about 18% but running like a freight train according to this data. Looks like a pretty evenly matched race to me and the taxpayer is the looser either way.

        • El Katz says:

          Patience, grasshopper…. They’ll make up the 2 Tril in a blink of an eye!

          USA! USA! USA!

        • Sdarules says:

          While not a fan of the spending under Trump. He did have to deal with the first major wave of COVID and those associated costs and the GDP hit when most of the blue states shut down for his last year in office. Biden isn’t dealing with the same headwinds. But this debt is definitely bipartisan at this point. The best thing they could do is stop trying to outspend the previous administration. At this point we need a no sacred vow cuts across the board to balance the budget in 2 years.

    • OutWest says:

      What worries me most is the concentration of wealth…

      • Cold in the Midwest says:

        What worries me is the concentration of Powell. He sometimes looks exhausted and I wonder if the surprising resilience of the economy is wearing him down. Tough to concentrate under these circumstances.

        In the good old days, interest rate hikes could be counted on to cool off an overheated economy. Not this time, at least not yet. The fire was burning much hotter than the Fed realized. A fiscal firestorm.

        Biden’s concentration (or lack thereof) is an additional worry.

        • pnw techster says:

          I really wonder if there exists a constant under tuning of metrics for curb appeal that has made the fed insensitive to actual reality over the past decades. I don’t know if it’s fake news but alternative measures of inflation seem to imply inflation is not accurately depicted by the measures that keep the fed “data driven” my own experience with healthcare, education, and housing (which are non-negotiable needs) would suggest a significantly higher rate of inflation.

      • kramartini says:

        That is an easy worry to fix. Confiscate wealth to create egalitarian poverty.

      • Bead says:

        Got a great wide world of laborers. I expect UAW will find out soon.

    • Ted T. says:

      MUSS: We all know that the only reason you look at Wolf Street are the women’s lingerie adds.

      • Wolf Richter says:

        🤣 I love the “busty Russian women looking for mature men” ads I’m getting on my rare lucky days.

        • Al says:

          Yup ..They are Transvestmights’
          Russian Virtual Reality…

        • Kent says:

          Wait! What? I’m just getting power tools! Lousy google algorithms…

        • Kenny Logouts says:

          I’m bullish Google based on these insights, it sounds like quarter of a century have refined their targeted ads to perfection!

          Bubble, with added AI bubbles.

        • DDG says:

          Me too! All I get is an ad in Spanish advertising a strange spiky fruit that looks like one of the eggs in Alien…. Jeez, what does that say about my Google record?

        • andy says:

          I just unblocked my ad-blocker.
          Here we go…

        • Lili Von Schtupp says:

          No beefcake Russian gents for me, but I know who to go to for a steel quonset hut.

          Any housing is housing I suppose.

        • Harvey Mushman says:


          That reminds me of one of my favorite Warren Zevon songs. “Lawyers, Guns, and Money”.

        • 91B20 1stCav (AUS) says:

          …opened this post to magnificent (and on-sale) Technicolor portraits of Sophia Loren, (B&W) of Rita Hayworth, and an unknown bathing beauty dwarfed by the nose of the WWII-era PBY she was posed before (…I never click, so the chaotic cavalcade continues…).

          may we all find a better day.

      • MussSyke says:

        I usually get one for a T-shirt about “short girls”. I do love short chicks, but that seems like a counterintuitive ad for a site like this. You’re getting lingerie, huh?

      • Zaridin says:

        Wait…all I get are ads for kitchen appliances. Da fuq? I want in on the lingerie ads!

      • Miller says:

        Darn must be missing something, I get those lingerie ads or sometimes the ladies swimsuit catalog ads maybe once in a month if lucky. And even then usually winds up being tame fare. I miss the days when those auto gear companies always had those banner ads with the racy models showing off the latest wheel cover or souped up drive train. Hilarious too that this is probably the most heavily commented sub-thread on WS in past month.

    • top gnome says:

      not a math wizard but i think thats like 95000 per person.

      • Gattopardo says:

        I say we take care of 50% of the debt right now. Everyone pony up $47.5K each. You’ve all had PLENTY of time to save up.

        • El Katz says:

          Do they take checks?

        • MattF says:

          Have everyone take on their share of the debt individually. Then on the count of three we all declare bankruptcy. Debt gone. US credit remains sound. Restart the party.

  4. Hesh says:

    For some reason, I start smiling every time one of my .25% to .75% treasury notes matures, with proceeds going into 5.5% T-Bills.

    Finally, I get a slice of government deficit spending. It’s not a $100,000 PPP loan/grant, or a huge price windfall on BBB bonds, or 2.7% mortgage financing, or a huge corporate tax cut, but at least I get something.

    • TimmyOToole says:

      I’m chuckled at your 2.7% mortgage refinancing comment thanks, as I refinanced mine at 2.65%, which is as far as I can tell my only “gain” from the incredible Covid blowout splurge of debt and spending.

  5. Sufferinsucatash says:

    I want to thank the Academy!

  6. DRM says:

    So since the dept ceiling deal, this is more than $200,000 per second. More than $700 million per hour. WOW!

    • longstreet says:

      Just as an aside…

      National Debt was $9 Trillion in 2008

      Budget deficit was $1 Trillion.

  7. DRM says:

    I remember the gnashing of teeth when gov’t debt was nearing $1 trillion. Took 200 years to amass that debt. Now we can do it in about 2 months. Way to go team. A huge increase in debt creation efficiency there.

  8. roddy6667 says:

    This couldn’t end badly, could it?

  9. Nissanfan says:

    There should be a party in Congress, to celebrate that incredible milestone!

    • Gattopardo says:

      Nah, save it for the golden number, $50T. Won’t be that long to wait…

  10. vecchio gatto veloce says:

    “The debt pileup is an intractable horror show for the future.”

  11. Gary says:

    All that needs to be done is raise taxes. It’s is either the government or the Oligarchs (families), but there isn’t enough to fund both.

    • Einhal says:

      Aren’t there decades of data showing that tax revenues as a percentage of GDP stay relatively consistent regardless of income tax rates? Raising income taxes will not do it. We need to cut spending, period, or implement a 20-25% national VAT, which will affect everyone, and in a negative way.

      • Kent says:

        Taxes as a percentage of GDP of have been within a range of 15% to 20% of GDP since WWII. But tax rates and loopholes have changed wildly over that period of time. Since rates haven’t been consistent, I don’t think we can say the range is some natural phenomenon. It could just mean that once revenues as a percentage of GDP increase past some percentage, the government reduces tax rates and/or creates new loopholes.

      • longstreet says:

        It is manifest that for every dollar of tax revenue, Congress spends $1 + X.
        No increase in tax revenue cures the reality of that equation.

      • DDG says:

        Be patient- that government spending cut will come. It’s called hyperinflation followed by economic collapse. I only hope that I’m dead by the time it arrives.

      • Sams says:

        Add a transaction tax and there is money to be collected. Say half % each time money change hands. Easy to implement, no deductions and very effective at collecting tax.

      • kam says:

        Value-Added-Tax is just another tax. It is never proposed to replace, say, Income Taxes. It is just another Tax Burden, ballyhooed as a more “efficient tax.
        The USA has too many Riders, not enough Horses.

        • Einhal says:

          My point is that if we want sustainable European style spending, we need European style taxation.

        • JimL says:

          That is a gross oversimplification fed to you by your propaganda masters.

    • Happy1 says:

      Look at the graph! We have a spending problem!

    • andy says:

      Comrade Gary, shouldn’t they raise taxes to 100% by now? And if so, will that cover spending thru December?

  12. Tyler says:

    For some reason I suddenly feel physically ill.

  13. Bobber says:

    This talk of “soft landing” is ridiculous if it depends on the government running $2T deficits. That situation is more akin to flying above 30,000 feet, until the fuel runs out.

    • Julian says:

      I totally agree with you. I think that there can be no soft landing in the USA and in Europe. If a bank starts lowering interest rates, it means that the situation is out of control. Otherwise, we will fly high until the fuel runs out.

  14. Frostbitefalls says:

    I can hear at all the cocktail parties in what, February?! all the congratulations going around that we just eclipsed 34 T…. I know I know. All that debt doesn’t matter. Until it does…

    • John H. says:

      Case in point: MMT thinking from Nobel Laureate Paul Krugman:

      “First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation. Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves. defending the “it’s money we owe ourselves.”
      -Nobody Understands Debt, New York Times, Opinion Page, January 1, 2012

      • LordSunbeamTheThird says:

        Absolutely. I saw article in Forbes that QE didn’t increase the money supply. I couldn’t believe it. Its mendacious at best, I think they actually are that clueless, as has been pointed out they are paid to believe it. As Bailey, resident Bank Of England chair, no economics knowledge and I think a grade C at O’level Maths (UK 16 year old test) felt no shame in saying he didn’t believe in a link between money supply and inflation!!!! He is in charge of the quantity of printing money at the bank !!

        Its more like you lent 200K to your son on a supposed business venture and then he just lost the lot on internet scams, then hey it cancels no probs! I mean Krugman states oh in real terms its defaulted.

        People should be asking where this insane amount of money has gone but i can tell you now, fraud. Same in all countries which is why the only answer is small government.

      • Happy1 says:

        OMG what a clown.

      • longstreet says:

        and MMT’s response to inflation is not to raise rates but to TAX MORE.

        So, as businesses and people get whacked by inflation, they will then get whacked by higher taxation. Now that quite a solution …. for an ever growing federal government, a government that will increase in size due to the problem it causes and the solutions it offers.
        Does Krugman get that?

      • kam says:

        Krugman is an economic ignoramus, notwithstanding his Nobel Prize.
        Deficits in the past mainly paid for foundations. Security in the face grave and immediate danger, the Interstate Highways, etc.
        Debt today, long term or essentially long term, since it gets rolled over, is to pay for current consumption.
        Taking out 30 year Mortgages to pay for today’s optional expenditures is the clearest sign of whistling past the graveyard.

      • Sams says:

        There is no Nobel laurate in economics. It is “Svenska Riksbanken” , the Swedish Central bank that hand out that price.

        For sure Krugman would not be a math Nobel laurate, it look like he have missed out on exponential functions.

  15. Kunal says:

    Everything is going as planned. Dollar debasement is the best way to reduce debt and this was the plan all along, they were just waiting for an excuse and pandemic was a perfect one; more will come in the future. And this is the best way to steal from all regular people in the world and enrich the rich asset holders. Fed is doing an awesome job.
    If I had a printing press to print paper money and big guns to force everyone to use my paper money, I would do the same. China was the last threat to this status quo but alas they are now circling the drain hole. US way of life will go on in the foreseeable future. Anyone who thinks that assets will crash and cash is the way to go is delusional. I have been saying this all along that assets will never crash in the USA and all doom dayers will lose their shirts and pants. Never fight the Fed and never trust what they say to general public. Instead follow who controls the Fed and the US govt. Check CAR data, CA SFH hit another all time high in August.

    Asset and real estate appreciation if anything will accelerate with higher inflation in the future and cash will be trash so please plan accordingly if you do not want to stay poor.

    • Wolf Richter says:

      Lots of assets have already crashed, including cryptos, lots of stocks, lots of bonds, and some RE. You just tuned it it out because you don’t WANT to see it.

      • Toby says:

        Well, crypto was never an asset to begin with.

      • 8ticks says:

        Is it an effective crash if most holders of those assets are in before the ridiculous bubble run up and are still in?

        I don’t have the answer to this, but how many people in areas where RE has pulled back still have a large cushion of equity?

        How many people in crypto like BTC are in before the ridiculous run up are still positive and are still in?

        I know the losses are real on paper from the highs, but is the pain differed to the majority if they still are positive or breakeven?

        So how much lower would things have to go to be an “effective” crash affecting the majority holders of any bubble asset.

        So far there seems to be zero panic on anything.

        • Wolf Richter says:

          Once upon a time, you were worth $1 million. Then you were worth $3 million. And now you’re worth $1 million. Agreed, nothing to see here. C’est la vie, not a crash.

      • J Bank says:

        We’re seeing equity evaporate. It’s clear as day.

        Real estate equity is getting whacked and banks are getting paid for loaning money after years of artificially low rates. Check out the terms on new commercial loan prepayment penalties: they are STIFF. If rates come down, it’s going to be a huge boon for the banks (as their NIM increases), not for the consumer. That ship has sailed.

        The market is treating the big tech stocks and other huge cash position companies like a bomb shelter right now. Rightfully so. Companies that don’t need to borrow are going to be able to scoop up assets at BK valuations. We’re already seeing office building sell at land value in A+ locations just because the building is a little dated. Not long before the (very few) prudent cash heavy companies start purchasing these instead of paying a landlord rent.

    • Einhal says:

      Do you really think assets can survive without a stable currency? If so, why are Venezuela and Zimbabwe not beacons of the economic world?

    • andy says:

      Tesla is back up there again. Thinking of shorting it back to $100. What do you think about Nvidia or Eli Lilly? Good for $300 points down?

    • Sams says:

      Inflation measured by consumer price index is a slow “crash” of asset value if asset value do not inflate at the same rate. Asset price did inflate first, but now assets do not inflate and CPI inflation is high and may over time catch up with asset price inflation.

    • MM says:

      Alternate hypothesis for the future:

      DURABLE goods like houses, cars, technology etc will experience a deflationary crash.

      NONDURABLE goods like food, gas, and other life essentials will hyperinflate.

  16. Kernburn says:

    An increase of 60% since 2018 and what do we even have to show for it? A bunch of social assistance programs that are about to expire for good. A lot of corporate welfare that wasn’t exactly necessary. Billions of masks and wipes sitting in landfills. Imagine how much more we’re going to have to spend once we find ourselves in a recession.

    • All Good Here Mate says:

      So, where I work (a government entity), we are trying to find a vendor to dispose of all the hand sanitizer we have on-hand. Yes, we have a lot.

      Our first quote came back north of ten-grand. To get rid of soap.

      I don’t remember how much it cost to get all of it. Not that it mattered because shmoes in Nebraska and Vermont helped pay for it here in Florida. Thanks, federal government.

      Think about that.

  17. blahblahbloo says:

    Who has a good summary on what the heck is going on here, without total partisan BS from either tilt (I don’t want to hear that we just need to tax Ray Dalio more, and I also don’t want to hear that we just need to cut some arts funding, like, neither or those are material reasons for this debt)?

    • Einhal says:

      In my view, it’s our social spending (Social Security (yes, I know that nominally S.S. pays for itself, but all of the revenue directed toward S.S. through payroll taxes could be used elsewhere if not for S.S.), Medicare, and Medicaid) and defense.

      Add in all of the other programs that someone deems “essential,” and it’s easy to see why we are in the position we are.

      • LIFO says:

        Let’s not forget all of those tax cuts that will pay for themselves, but don’t.

        • longstreet says:

          The TRILLIONS in new spending kinda tipped the scales,, didnt it?

          The word Trillion is now tossed around Washington DC like a frisbee on campus in the springtime.

        • top gnome says:

          I agree the tax cuts for billionaires are ludicrous. No one makes that much money on their own.

        • Wolf Richter says:


          Yes, totally agree, we should just let old people starve to death and sick old people die in the street, so that we can subsidize the semiconductor companies even more, so that we can encourage Corporate America to pillage everything there is, and so that we can subsidize RE even more, and subsidize the wealthy even more. It’s such a shame that we have these twisted priorities, where workers pay into a pension fund and health insurance system that is then there for them when they retire. We could just use their SS contributions and Medicare contribution for something else, such as subsidizing the wealthy even more. I have no idea why we waste these SS contributions and Medicare contribution on the people that contributed them.


        • Einhal says:

          Wolf, I’m not saying we should be letting old people die in the streets. But we’ll never be able to get these $2 trillion deficits under control with taxes alone. We’d have to cut spending SOMEWHERE (and I agree that subsidies to semiconductors and big oil should go first) and the programs that take up huge portions of the budget are likely the only place they’ll be able to go.

        • Wolf Richter says:


          You didn’t read my comment all the way!

          This whole discussion is beyond stupid. The amounts paid into SS by future beneficiaries of this pension fund have exceeded the benefits paid out for two decades, creating the $2.7 trillion surplus that is the SS Trust Fund, and now it has had a minuscule deficit, that the Trust Fund has zero problems covering — that’s what the Trust Fund is for. This retirement fund isn’t asking for a bailout, for crying out loud. What is this bullshit, where does this bullshit from?

          The contributions made into the SS system cannot be used to pay anything else. They go into the Trust Fund, and benefits are paid out of the Trust Fund. You want to take the benefits of that pension fund away while still collecting the contributions to that pension fund? What kind of stupid BS is this?

          Use your brain!! I’m so sick of this BS about SS.

          Look at this! People who say that the SS system is the problem in the budget deficits are cluelessly regurgitating manipulative stupid BS and lies:


        • Fed Up says:


          There are a lot of other places we can cut other than SS and Medicare after the government stole from us through payroll taxes our entire working lives. The size of the federal workforce needs a huge RIF for one thing. Federal agencies are out of control with grade inflation and OPM signing off no questions asked. Federal salaries were modest before 2000. Then they exploded. There is so much waste in the government there is no way I can touch on even a fraction here. Why would you even suggest touching SS and Medicare. Those were earned benefits.

        • Einhal says:

          I know that the social security trust fund has trillions in assets that can be used to pay benefits. But I also know that those assets are not hard assets. They’re IOUs from the federal government. What happens if, for the sake of argument, in 20 years, the federal government can no longer borrow large amounts of money. So the only solutions then would be to 1) repay the IOUs by taking money from somewhere else, 2) default, 3) repay the IOUs with printed money, devaluing it. In solution 1), working people get screwed to pay those benefits. In 2) and 3) , the retirees get screwed.

          My point is that our fiscal profligacy will come at a cost. Eventually, SOMEONE will have to get screwed, and I’m not convinced it should always be working people and never retirees.

        • Wolf Richter says:


          Quit posting this effing braindead BS about SS. Those assets are “Treasury securities.” They will never default. And they pay interest, generating interest income ($65 billion in the last fiscal year) for the Trust Fund.

      • Rohry says:

        …”nominally Social Security pays for itself”…
        Social Security expenditures exceeded income in 2022, and it will accelerate in the immediate future. The “Social Security Trust Fund” is part of the debt that Wolf mentioned in the article.

        • longstreet says:

          Concerns about Social Security…
          but there always seems plenty of money for social programs, rent subsidies, food stamps, unemployment benefits, EV subsidies, and Ukraine, Syria, etc.

        • Ethan in NoVA says:

          Need to get the healthcare costs under control. Would be awesome to let LLM/AI take a huge cut out of medical expenses.

        • Wolf Richter says:

          “The “Social Security Trust Fund” is part of the debt that Wolf mentioned in the article.”


          The Social Security Trust Fund has $2.7 trillion in assets that are invested in Treasury securities that earn the Trust Fund interest. I have some assets that are invested in Treasury securities, and they make me some money. My assets are not part of the debt. My asset is someone else’s debt. Your debt is an asset for the bank that earns interest on it.


        • WB says:

          WRONG. Do you even understand how a trust works? Many of us worked and PAID INTO the trust. The trust can hold many assets that earn income etc.

          Now, idiot politicians may have borrowed against that trust without our consent…. Clearly this has been a mismanaged trust, which would lead to a lawsuit if this was a private entity.

          What any working stiff should be asking is; how do I get all my money back with interest?

      • blahblahbloo says:

        The SS trust fund balance is still quite large, and I’m asking why we have these debt levels now, not why we might have even worse ones over coming decades.

        So this answer is wrong, just like taxing Ray Dalio or cutting arts funding.

    • Paul from NC says:

      Well, there’s the official “defense budget”, and then there’s the real, completely unaudited defense budget.

  18. SocalJimObjects says:

    It’s a true milestone!!! Thankfully, the next 30 will not take as long!!! Keep at it everyone. Remember, hyperinflation is a nationwide endeavor!!

  19. Dubronik says:

    Wow….Trump and his art of the deal brought us 7.5 Trillion+ and Biden is not far behind… Almost $6 Trillion and counting…. They just don’t care…

  20. Depth Charge says:

    What these filthy, corrupt politicians have done to the country is criminal. They have saddled the young with debt which cannot be repaid, so now they work to inflate it all away, stealing the fruits of the labor of the workers. They are diabolical. There is a special place in hell for central bankers and politicians. Pure evil people.

    • longstreet says:

      Debt is future consumption denied.

      If the Youth knew of the financial environment being left to them by this recklessness, they would shift from climate concerns to financial concerns.

      • Naren says:

        As an under 30 who pays attention to finance I don’t think so. Basically everyone under, I would say, 40 or so knows the system is in active collapse. They just don’t care (or are at most hedging their bets) because they (correctly imo) see climate change as a bigger existential threat.

        You can have a society without finance capitalism funded infinite growth. You can’t have a society in a +3-5C world, you’d struggle to even have 1900 levels of technological comfort.

        Most young people know we’ve been fucked. This party is ending. We’re just trying to keep the next one from being run by total morons.

        • Pilot Doc says:

          “Correctly see climate change as a bigger threat”

          Blindness to propaganda adopted voluntarily as an original, independent position.

          You have allowed them to define the talking points.

          They have mastered psychological warfare through mass media.

      • Ethan in NoVA says:

        There is the quiet quitting movement (do as little work as possible to stay employed) as well as the overwork movement (take on multiple remote jobs without the employers knowing and do enough to keep them all happy.) Some of the young people are tuned in and playing along.

        I’ve heard of someone I know doing #2 pulling $500K/year. Happened by accident, 2nd job offer hit and he just never got around to quitting first.

        • Depth Charge says:

          Another fraudster, huh? WFH = pretend to work.

        • Mr. House says:

          Don’t disagree with you Depthcharge, but you pretend that wasn’t happening when people were in the office? The economic system is so maladjusted currently due to fraud, spending money just to keep people employed and so forth, does it really make a difference?

        • El Katz says:

          I wonder what would happen if Employer 1 finds out about Employer 2 and, suppose, Employee A inadvertently developed information or a solution ultimately provided to both Employer 1 and 2 while on their payroll….. somewhere in the blah blah of the Employee handbook it likely addresses when something becomes property of a company. My ex-employer had a clause buried in the Ass ociate Handbook that addressed that topic in such a way that, if you came up with the idea while at work on their nickel, they owned it. Not you. They used words like “proprietary” and other $10 mean sounding legal words.

          His $500K could vanish in the blink of an eye if they pressed it.

        • Mitry says:

          Depth Charge and El Katz: The guy literally works two jobs, what’s fraudulent about that?

    • SummaCumLousy says:

      Read the book “Six Myths that Hold Back America: And What America Can Learn from the Growth of China” by banker Frank Newman.

    • Dick Burns says:

      I’m tired of this shit. All people do is blame the government, or the democrats, or the republicans. Wake the hell up. This is a government by the people, for the people. Meaning the politicians are our proxy. Never in the discussion is the greed of the average citizen raised. Always someone else.

  21. Mike G says:

    One issue I haven’t seen discussed is the effect on demand of the end of the Covid-related special student loan situation.
    Interest on students loans started to accrue again this month and repayments will resume in October. Loan repayments have recently shot up from about $500m to $3.5b a week as those who are able rush to pay down loans with savings accumulated during the moratorium.

    • Bumphrey Gohard says:

      My student loans got forgiven. They were not 25 years old and they were worth more than 20,000. Gone. I have no idea how or why. The only thing I can think of is that the second series of loans from when I went back to school got rolled into the old remaining balance from the loans that WERE 25 years old. Otherwise it makes no sense to me. In any case, I’ll believe people are paying their student loans when I see it.

  22. Beer Me Up says:

    One thing I really appreciate about Wolf, is how he manages to stay above the influence of simple politics.

    If you are only able to look at things on a superficial level then it is always left vs right or right vs left… and that is probably the limit of ones critical thinking, because it is easy. Just blame the other guy for all your problems. But things go way deeper than that and to really dig into it is hard. Mr. Wolf really does a good job of cutting through the crust and getting into the meat of the problem.

  23. John says:

    Thanks Wolf,
    This is scary! “ intractable horror show for the future.”

  24. Andre says:

    Much has been written about asset prices falling.
    Given that inflation is the result of money created out of thin air or in other words currency debasement.
    If an asset such as a residential property or equity in a solid company’s value remains the same it would stand to reason that it’s price should increase.
    My question to Wolf is why should all asset prices fall unless they are over priced now or are we only going to see prices fall in those assets that are overborrowed or Zombies?
    A distinction between value and price has to be made. Price is what you pay and value is what you get. If the value remains the same inflation willcause the price to rise

    • MussSyke says:

      Thank you! I am always thinking this when people are overusing the term “bubble”. You just made my thoughts sound scholarly.

    • Rohry says:

      Only “bubble” assets will decrease in price. Other assets should “increase in price.”

    • kam says:

      “My question to Wolf is why should all asset prices fall unless they are over priced now”
      Because prices are set at the margin. Not 100% of all houses are bought and sold every year. Only a small percentage set the price.
      In the same way, if the U.S. Treasury doesn’t have an Emergency call on the Fed, should an auction of U.S Debt lack buyers, the Trillions in Debt will have no floor, and the real value of the Debt will be disclosed/priced.

    • Z33 says:

      I compare asset values to M2 growth and see if it’s above or below the trend. M2 was $15.45T in Feb 2020 and most recently $20.902T. 35.3% increase. S&P was 3,380 in Feb 2020 and now 4,444. 31.5% higher. Basically the same. So as the Fed continues with QT, M2 should fall and bring down assets with it. Housing being 35% more than Feb 2020 based on M2 growth should be no surprise even if rates are vastly different…cash buyers can still set the margin if poorer people that can’t afford 7%+ rates are pushed out.

  25. Asul says:

    The scene from naked gun comes to my mind: “Nothing to see here, people, move on, move on …”

    In theory the U.S. can go with 60 T of debt – no problem. Even 90 T of debt.

  26. Micheal Engel says:

    1) In Q2 2008 US gov debt was $10T. After Bernanke Financial Anti
    Regulatory Act of 2006 debt tripled.
    2) The clown show in congress started. They can’t get along in the
    Pourhouse. The unfinished debt ceiling ==> gov shutdown, layoffs,
    3) Chuck might try to stop them before they cause real harm. The more
    they fight, the longer they shut our gov down.
    4) The clock is running against Biden. The clowns know it.

  27. Micheal Engel says:

    Higher oil prices and UPS new wages are here to stay. Can UPS go BK ?

  28. longstreet says:

    When you subsidize something, you get more of it.

    And that is EXACTLY what the Fed did with their ZIRP. They subsidized debt creation. Brilliant! /S
    And Bernanke polishes his Nobel.

    • John H. says:

      Good post, Longstreet.

      Speaking of debt abuse and of Nobel (inventor of high explosives) reminded me of this quote:

      “Of all the discoveries and inventions by which we live and die this totally improbable helix of credit is the most cunning, the most liable, the least comprehended and, next to high explosives, the most dangerous.”

      – Garet Garret, The Bubble that Broke the World (1931)

    • fullbellyemptymind says:

      “Polishing his Nobel” – we have to put our differences aside for just a day or two and decide upon some particularly vile act that this phrase can refer to.

  29. Cobalt Programmer says:

    1. Debt’s dont matter anymore. If we don’t pay, how they will collect from US?
    2. Average man on streets don’t even know about debt ceiling or national tax receipts.
    3. If this debt-payment drama went on for hundred years, it can go even more?
    4. There are so many countries like Argentina, India and South Africa who never repaid their debts. Nothing went wrong.
    5. We can borrow from IMF and pay the money.
    6. Soon, money will loose the value, all debts can be paid with a simple zillion dollar bill.
    7. One man’s debt, other man’s wealth.

  30. Roger Pedactor says:

    Partially applied MMT will be as successful as partially applied Friedmanism.

    MMT says raise taxes, Friedman wanted UBI for the lowest tax brackets. Absolutely assinine.

  31. Brewski says:

    This cannot end well.


  32. Mike R. says:

    Powell is going to hold interest rates at this level longer than anyone expects in an attempt to force some spending/deficit discipline on Congress and the WH.

    Again, my point on the threat to dollar hegemony, primarily by Russia, is the driver. The rest of the world is getting very tired of supporting America’s “way of life”.

    You take 1 to 2 trillion out of supporting the “economy” and we’ll find out real fast how we been living way beyond our means. The impacts will be felt by everyone, not just the less fortunate working poor.

    And stocks? Well yes some represent as good as any hedge against inflation; that is until demand destruction drops their profits. And keep in mind that many supposedly “solid” companies are running with billions of debt on their balance sheet. Take a look at Home Depot.

    Finally, don’t be surprised if a very nast surprise shows up in 2024 if Russia elects to back the ruble with gold. This will have seismic impacts on our economy and way of life. It may also start WWIII. Afterall, our continued involvement supporting Ukraine is all about protecting dollar hegemony, lest anyone thinks otherwise.

    • Wolf Richter says:

      “…the threat to dollar hegemony, primarily by Russia, is the driver.”

      This stuff is just hilarious. Check a ruble chart. The ruble is in full collapse mode. It now takes 96 rubles to buy $1. In December 2019, it took 61 rubles to buy $1. In May 2014, before Putin invaded Ukraine for the first time, it took 32 rubles to buy $1. The ruble isn’t worth the toilet paper it’s printed on. Ruble = rubble.

      • WB says:

        In 1996 it took over 8,000 Rubles to buy a dollar…

        In that vain, 96 is a big improvement. So what? Are you suggesting that debt does not matter? That reserve currency status last forever? That trust can never be lost?

        I think a rule of law and bond market matter, so for now, so long as people actually believe the dollar has a just rule of law behind it, yes, the dollar will continue to be perceived as a good currency. The problem I see is the ongoing clown show in D.C. and the increasing evidence for a “just-us” system in America, with one set of rules for the oligarchs (club members) and another for the plebs… …like Russia.

        • Wolf Richter says:

          “In 1996 it took over 8,000 Rubles to buy a dollar… In that vain, 96 is a big improvement. So what?”

          Jeeesus The ruble was revalued and a bunch of zeros got chopped off. By early 1998, 6 rubles bought $1. Then during the Russian Financial and Ruble Crisis in mid-1998, Russia defaulted on its debts, and the ruble collapsed and was devalued again. You people need to read a little about the ruble, LOL

        • WB says:

          Even if “zeros are chopped off” it still doesn’t address my point. In 1996 it took a lot more rubles to buy a dollar!

          You also dodge my question on DEBT.

          LOL! indeed!!! I guess you old men are O.K. with USA becoming Russia, all while bashing russia. LOL, good luck with that cognitive dissonance!

        • Wolf Richter says:

          “In 1996 it took a lot more rubles to buy a dollar!”

          I addressed your point, you just didn’t get it: “revalued” is the key word.

          In mid-1997, 5,000 RUB = $1.

          Jan 1, 1998, Russia chopped off 3 zeros, and 5,000 rubles = 5 new rubles. This is called a currency “revaluation.” Lots of countries do this, Turkey is famous for it. So if you had 500,000 old rubles under your mattress, the next day you had 500 new rubles. Presumably, the 500 new rubles would buy as much as the 500,000 old rubles. So after the revaluation, 5 new rubles = $1. Now 96 of these misbegotten new rubles = $1.

    • JimL says:

      That is just nutty talk seeded by pro-Putin talking points.

      In the real world, the ruble in its current form will never replace the dollar. Never. If you are a merchant in some 3rd world country, what currency are you going use to stuff all of your life savings under a mattress? The dollar which is backed by the most dynamic economy in the world and has been a pillar of stability for a very long time, or the ruble which is backed by a by a completely corrupt, broken down economy that wouldn’t even function except for the vast amounts of oil and gas produced in the country and has a long history of instability and blowing up and having to be bailed out?

      As for the nutty goldbug fantasy of some country (like Russia) backing their currency with gold, it will never happen either. No country would ever want to give up control of thier currency to a fickle metals market that can easily be manipulated by its enemies. Why would any country do that?

      There are many reasons numerous countries have moved from gold backed currencies to fiat currencies in the past 100 years and zero countries have moved from fiat currencies to gold backed currencies. There is no upside in it for a country to do so. None.

      Might as well wish for societies to go back to horse drawn wagons instead of cars and trucks. That is equally likely to happen.

  33. SOL says:

    Is this debt counted toward GDP? If yes, then as what percentage, and how does GDP look without it?

    • Wolf Richter says:

      GDP is a measure of spending and investment, not of borrowing. For GDP purposes, it doesn’t matter where the funds came from that were spent and invested. GDP also doesn’t count income (GDI does). But you can do a debt-to-GDP ratio:

      • longstreet says:

        I am not certain as to the importance of US Gross National Debt as a % of GDP.
        If GDP was red hot, and the national debt was less hot but still climbing sharply, would that be a good situation?

        GDP is comprised roughly by 25% government spending.
        The federal budget for 2024 is projected $6.8 Trillion. Revenues at $5 Trillion. That would mean new debt issuance needed will be roughly 26% of the proposed expenditures. (1.8 of the 6.8). Because of the 25% contribution to the GDP by federal spending is going to be 26% new borrowings, 6.5% of the GDP will be from the spending of money not yet borrowed. (26% of the 25% Federal spending in the GDP )

        • Wolf Richter says:

          GDP is used as a convenient place holder for tax receipts. GDP and tax receipts track closely together over time. So if GDP goes up, tax receipts go up similarly. This makes GDP a standardized measure of the relative burden of the debt on the economy.

          I prefer interest payments as percent of tax receipts, but that is much more narrow and depends on other factors, such as interest rates, that vary in different directions.

    • Not Sure says:

      Debt vs. GDP always seemed at least partially circular to me. Gov borrows money -> Pays employees & contractors -> Employees and contractors consume goods and services -> Increased consumption/production boosts GDP. With government spending being something like a quarter of GDP, and an increasing amount of that being borrowed, Debt-to-GDP seems like it’s becoming less and less meaningful.

  34. SoCalBeachDude says:

    The bottom line is that Congress doesn’t care at all about the debt and the news won’t even discuss it and all across America practically nobody care at all except for how fast they can increase the US federal debt. Even the Federal Reserve doesn’t care and can’t do anything about it except to cut off the US government from any further ‘prosperity dividends’ which is has now done as the government flies right off a fiscal cliff!

  35. DDG says:

    It’s not just the government; it’s also the average Joe on the street. Once the latter (and his 100’s of millions of fellow citizens) stopped relying on himself to navigate life’s problems and turned to Mother Government for aid, the American way of life was doomed. Sociocultural and political death will come slowly but inevitably. Crushing debt is just a byproduct. A healthy democracy requires citizen self reliance, educational competence, suspicion of large government, and a generally shared value system. If a country has that, productivity takes care of itself and taxation is minimal. All of that is now in question.

    • Neel Kash & Kari says:

      I would argue the opposite: The byproduct of crushing debt is more reliance on government and a less stable society.

      • Einhal says:

        Chicken and egg. We have the crushing debt because the voting people voted themselves goodies paid for by the public.

    • WB says:

      I will simply add that healthy economies are allowed to grow AND contract as resources, and innovation change the society’s ability to produce etc.

      The privatization of federally(tax)-funded gains (think Pfizer during COVID) and socialization of losses (bailout of banker fraud) is corporatism/fascism, not capitalism.

      • fullbellyemptymind says:

        Could you name one of these healthy economies? And I assure you I’m not being a jerk here, I’m genuinely interested.

        Singapore, maybe?

        • WB says:

          See my comment above, there is NONE, that is why a global depression with global inflation is now the only outcome. NO ONE is really allowing bad debt to clear…

          Hedge accordingly.

  36. Jason says:

    Great analysis Wolf. Massive government spending is one of the largest contributors to the inflation. Actually, inflation is a hidden tax that is taken from the savers.

    By the way, I noticed that your “drunken sailors” analogy is used for government spending. Wolf, you may have very high profile readers:

  37. Yancey Ward says:

    It appears that after 2020, the upslope is on a new, steeper trend, and we won’t be returning to the trend that was in place before 2020.

    I fear the beginning of the end is at hand for the US government finances. We may blow past $40 trillion by the end of 2025.

    • kam says:

      You, sir, are an optimist.
      Expenditures will rise beyond budget and tax revenues will fall.

  38. Dennis says:


    What’s the end game? Hyperinflation or depression?

    • WB says:

      Both, on a global scale. The global population just past 8 billion, so there is plenty of demand for a decent standard of living. Think about all the inputs for a good standard of living. Remember, the real economy cares about things like supply and demand. The financial eCONomy is just that, a con.

      Use the information Wolf provides to hedge accordingly.

    • John H. says:

      My guess would be: Both

      Unsure on chronological order, though…!

    • WB says:

      Both, and on a global scale.

    • Wolf Richter says:

      Neither. Regular long-term inflation in the 4-8% range, higher interest rates for very long, and longer Fed QT. That will do the trick. Means also, lower asset prices. This is not the end of the world.

      • WB says:

        You are an optimist Wolf, good for you! I guess you actually believe the inflation numbers. My food, utility, gas, and insurance bills say otherwise!

        No way the Fed’s balance sheet ever goes back to zero! I will officially bet you $100!


      • MM says:

        Wolf – how do you see higher rates and inflation affecting commodity prices?

        I agree that they will pull down on durable goods prices like homes, cars, computers etc. But at the same time, I suspect high inflation & rates will inevitably lead to elevated prices for things like energy.

    • jon says:

      The end game is being playing on for last few decades.
      Govt debt would keep rising, FED’s balance sheet would keep rising over time.
      USD would remain reserve currency as TINA.
      Inflation would be high as it was for last few decades ( although masked by manipulated govt metrics ).
      Rich would be richer and richer.
      Quality of Life for average Americans would keep going down as it has been happening for last few decades.

    • Paul from NC says:

      Stagflation…for a long long time.

  39. Urmas says:

    Does the graph showing the interest payments as percentage of tax receipts include social security and Medicare taxes? If it does wouldn’t the chart be deceptive? Also, when Federal Reserve returns the interest on its holdings to US Treasury is this consider a tax receipts?

    • WB says:

      Wolf has covered this many times. Since the Fed is losing money, no remittances are going back to the treasury until the Fed is made whole and those losses are paid back. I am sure Wolf can provide a link.

    • SoCalBeachDude says:

      The Federal Reserve always remits around 96% of its profits each and every year to the US Treasury and this is the equivalent of tax receipts, but the US Treasury won’t be seeing profits from the Federal Reserve anytime in the near future as the Federal deficit spirals out of control.

    • Wolf Richter says:

      1. As I said: “The measure of tax revenues in the chart below – total tax revenues minus contributions to social insurance and some other factors – is what’s available to pay for regular government expenditures, including interest expense.”

      Social Security, Medicare, etc. are pension and health-insurance programs that are paid for by their beneficiaries. Neither their revenues nor their outlays should even be in the budget. They should be set up as separate funds.

      2. Yes, the Fed’s remittances to the Treasure are part of the overall tax receipts.

  40. Not Sure says:

    “That’s the measure that matters the most.”

    Tax revenue going to interest on gov debt is in an unbroken line shooting straight upward. At this rate we’ll be up around 50% in a few more quarters. Clearly not sustainable. The current rate of increase is about 15% per year, and more rate hikes amidst rising long-term yields and tsunamis of newly issued debt are only going to accelerate the problem. This is simple… We can’t be at 75%, 80%, 90% of tax revenue going just to interest in the next couple years. Congress is playin chicken with the Fed. And Congress has neither the will, nor the sense, nor the brainpower to change course. Something has to give. The Fed will eventually be forced to flinch.

  41. WB says:

    We are quickly approaching the event horizon, where “we the people” pretend to work, and they pretend to pay us…

    Read “Confessions of an Economic Hit Man” and you will understand how we started down the path that we are on. Financialization made a lot of privileged paper-pushers in banking and finance, as well as their political puppets, very very wealthy, and kept the plates spinning for a bit longer.

    However, real economies, require the production of real things, and that requires resources (commodities and consumable calories). Thanks to our petrodollar, we have had a privileged position and have been able to acquire these things on the cheap while exporting inflation and killing any competition (quite literally) to this payment system for global trade. The payment system to settle global trade is changing, along with the geopolitical power structure. Interesting times gentlemen, use Wolf’s insight to hedge accordingly!

  42. Debt-Free-Bubba says:

    Howdy Folks YEP, they did a great job didn t they. Wanna know the best thing Govern ment is good at????

    Dividing a nation to think we are governed by a two party system..

  43. AV8R says:

    Rates: Paused

    Markets: Higher for Longer

    🛩: No Landing

  44. JC says:

    There is no entity with greater undisciplined spending power and disregard for efficient spending than this government. The excessive waste is intentional and targeted to big club membership.

  45. Micheal Engel says:

    Biden-Modi-MBS and Bibi silk road went in flame, yesterday.
    The G20 fantasy sank in the Indian ocean.

  46. Xavier Caveat says:

    I could barely utter Billion with a capital B around the turn of the century, but now I can converse in trillions in small case letters, so there’s that.

  47. unamused says:

    Wait, wait! I know! Tax cuts for the rich! Privatize Social Security! That will fix everything!

    Just kidding. No, really.

    The history of federal deficits since 1980 is an interesting one, like a slow-motion train wreck is interesting, and parallels related parlous history.

    Forty years of egregious policy failures, largely involving selling out to wealthy campaign contributors, guarantee that the US, and by extension, the rest of the world, now has problems for which there are no solutions and, for that matter, practically nothing in the way of mitigation.

    Still, serious as they are, issues related to the US national economy and finance, truth be told, don’t rate any higher than fifth or sixth on the list, which give you some indication of how deep the doo doo really is.

    The good news is that it should be possible to hold things together for at least a couple of years, depending on how precipitious the impending political descent turns out to be, what with the planned purges and all. The bad news is that my colleagues are increasingly persuaded that the collapse of civilization has already begun and is not waiting for the Project 2025 end game. You can google it. My involvement any more is mostly limited to doing research for the post mortem, so I spend a lot of time on web sites like this one.

    Cartoon. Man in tattered suit, addressing a few small children, sitting crosslegged around a camp fire in a cave, with a horizon of smouldering remains of a cityscape in the background: “Yes, the planet got destroyed, but for a beautiful moment in time we created a lot of value for shareholders.”

  48. MM says:

    That last graph looks like its going to heck in a straight line…

    • elbowwilham says:

      Its not the overall number that is concerning, its the rate of change that will send us over the edge.

      • MM says:


        At the current rate of change, the overall number will be concerning rather soon.

  49. Spiceoflife says:

    Reading your site wolf has shown me so many train cars/variables I didn’t see as clearly before stumbling here. It feels like we are barreling down some financial track that just doesn’t feel quite right and keeps making me nauseous… this site makes some sense of the nausea. I too have been waiting for the crash… but I never knew how well I could see the train before it crashes.. if it ever does. All of these articles just keep feeling so ominous adding dysfunction to the overall picture I have of our system. Thanks to you and all the engaging comments!

  50. Swamp Creature says:

    John Williams, former Fed governor, just stated that inflation is running at 11.5% vs the 3.7% reported by the government. I agree with him. Most the items in my monthly budget are up 10% to 12% over last year. Some services are up 20 to 25%. The government’s figures are lies. Bold face lies. They are there only to serve one purpose, to dupe the public at large and keep them from revolting and rioting if they knew the truth.

    • MM says:

      My biggest gripe with gov’t inflation figures is that they’re rate of change, not index values.

      The public cheered when CPI finally made it to 3%, not realizing that prices just *stopped increasing* rather than going down.

  51. William Leake says:

    10 year Treasury just hit its highest yield since 2007. Powell will be happy about that. The Fed did not signal a hike this time, so there probably will not be one. My guess is Powell will say nothing to spook the stock market. He and his Fed cronies probably own a lot of stock. I think they and their relatives are not allowed to trade. But I’m sure they have lots of friends: wink, wink, nudge, nudge.

  52. longstreet says:

    The coming SUPPLY of new debt offerings will raise the rates….especially in the back end.
    Now, if banks had trouble with the Ten Yr at 3.65, what now?

  53. 8ticks says:

    Does anyone else find themselves simply scrolling down through comments to find Wolf’s responses?

    I wonder if I’m missing anything else good….

    • Debt-Free-Bubba says:

      Howdy 8ticks. I read a little of both. Mr Lone Wolf s posts are way past my pay grade most of the time. Learned about the FED at his website. Great information found here and no where else…. Ask him a question and the response shows he truly wants people to learn something…….

  54. Swamp Creature says:

    Oil is heading for $100/barrel. Gas will average over $5/gallon nationwide. Wolf’s “Gas Station from Hell” will be posting $6.99 for regular gas.

  55. makruger says:

    While an argument can certainly be made that spending is excessive, the reality is that a lot of that 33 Trillion deficit can also be blamed on several decades of repeated revenue reductions (aka tax cuts for corporations and the wealthy).

    As a result the next severe economic crisis will be met with heartless austerity rather and targeted spending to help stimulate the economy and help support the unemployed. Greater depression, here we come.

    As always…we’ll blame immigrants and poor people.

  56. A US debt of 33 trillion US$ in relation to a population of about 330 million US citizens means 100,000 debt per capita.

    If people become aware of how much everybody is in the red, with a repayment looking way unrealistic to most of them, it may well trigger a loss of confidence in the US dollar.

    Wolf, have you calculated where the US Interest Payments as % of tax receipts are going in the next years, if interest levels stay as they are and bonds with low payments are replaced with new ones? And what interest levels would eventually lead to 100% spending of tax receipts just for repayments? If this level is approached, it would be difficult to issue new bonds just to pay interest for old ones. I am not sure what would happen then, but it will not be good.

    • Wolf Richter says:

      In terms of interest payments as % of tax receipts: we know where interest payments are going (up); but tax receipts are just a guess.

      One of the reasons why the percentage spiked is because 2022 was a shitty year for stocks, bonds, cryptos, etc. and capital gains tax receipts plunged from the huge highs of 2021 and 2020. Much of capital gains taxes are paid in the first two quarters of the next year, so the drop in capital gains taxes of 2022 hit Q1 and Q2 of 2023, and we saw that in the spike of the percentage in Q1 and Q2.

      The labor market is still very strong, with growing and record employment, strong wage growth, etc., so that generates growing income tax receipts. The trend continues, but over the next few years, there could be a recession with a decline in employment and income tax receipts, and if that happens, you will also see rate cuts, and interest payments on T-bills respond quickly to rate cuts; and so interest payments will drop. So it’s a very complicated picture, which is why predictions about tax receipts are usually wrong.

  57. Cookdoggie says:

    Things are going to heck in a straight line.

Comments are closed.