What Changed?
After years of easy money, America’s bill is in. The US federal debt as a share of GDP is “close to its highest level ever.” And its rate of increase is not expected to slow anytime soon, as Econofact claims, due to “the difference between tax revenues and government expenditures.”
The problem? Interest rates are still historically high. We are no longer in the era of cheap money as interest payments have risen significantly since 2020.
For investors, the question becomes not just “how much is the debt?” but “how much does it cost?” And “who bears that cost in the economy and markets?”
Trump Orders New Wealth Fund for America
Did you catch the news?
Recently, Trump’s Treasury Secretary let slip:
“We’re going to monetize the most valuable asset of the United States.”
What did he mean, exactly?
As you’ll see, Trump could soon unleash a massive new boom in America. One that could dwarf the rise of crypto and NVIDIA, combined.
Former Presidential Advisor, Jim Rickards says:
“We’re talking about a state asset that’s so large – if you divide the figure by the number of households in America, it’d be enough to make every family millionaires.
And it will be unleashed starting as early as this summmer.”
For the full story, click here.
The Numbers
US national debt as of October 2025: over USD$38 trillion for the first time — New York Post, November 2025
US national debt as of August 2025: reached $37 trillion for the first time. Clearly borrowing is not slowing down. — New York Post, November 2025
Annual interest payments as of November 2025: approaching $1 trillion ($970 billion) — Peter G. Peterson Foundation, November 2025
Annual interest payments as of 2024: cumulative $882 billion. This makes interest costs the third-biggest federal spending category. — Peter G. Peterson Foundation, November 2025
Interest costs in 2020: less than 6% of government expenditures in 2020. — Econofact, July 2025
Interest costs in 2024: ≈ 13% which exceeded the government’s level of defense spending. — Econofact, July 2025
Why It Matters
The US Government Accountability Office (GAO) claims federal “debt is growing faster than the economy,” which makes sense in certain, short-term occasions. For example, when the country was recovering from the Covid-19 pandemic. Or during a natural disaster. But, according to the GAO, it’s “unsustainable” to have this level of borrowing over the long term. Especially when the economy is not in distress.
Definition of sustainable borrowing: As per the GAO, it “means that federal debt grows at the same – or slower – rate than the economy.” And that’s not what’s happening now.
Federal implications: Rising federal debt means that Washington is now spending more to finance past decisions than it is investing in future productivity. This dynamic threatens both growth and fiscal flexibility.
Elevated Treasury issuance: As government borrowing expands, the Treasury will issue more bonds to cover spending. Both these factors can place upward pressure on bond yields over the medium term, according to Vanguard. In turn, government bonds become more competitive. They can even contend with the private sector. Should this happen, financing costs could rise, limiting business investment by tightening corporate credit.
Impact on inflation: Large fiscal deficits and higher interest costs can reinforce inflationary pressure by sustaining demand and keeping the growth of money supply elevated.
Investor implications: As the Treasury supply expands and investors seek greater compensation for rising fiscal risk, long-term yields are likely to remain elevated. And, this raises discount rates across all asset classes. Ultimately, higher yields could make government debt more attractive relative to riskier assets. When investors can earn 4% to 5 % on Treasuries with minimal risk, Goldman Sachs suggests, capital tends to rotate out of equities. This adds additional pressure to stock multiples.
The result is a feedback loop:
· Larger fiscal deficits push yields higher
· Elevated yields weigh on growth and valuations
· Slower growth feeds renewed borrowing
It’s a cycle that makes fiscal discipline, not just monetary policy, a key market driver heading into 2026.
Takeaway
America’s fiscal hangover is just beginning. Elevated interest rates mean yesterday’s debt is newly expensive. That burden is a cost that filters through to inflation, bond yields and valuations alike.
Rising yields aren’t just a bond story though. They’re the market’s price for years of fiscal excess. For policymakers, it’s a warning about sustainability. And for investors? It’s a reminder that even in a world of cooling inflation, the bill for cheap money has finally come due.
— Lauren Brown
Editor, American Ledger
Sources:
Econofact, July 2025 https://econofact.org/the-cost-of-financing-u-s-government-debt
Federal Reserve Bank of St. Louis, November 2025 https://fred.stlouisfed.org/series/FEDFUNDS
New York Post, October 2025 https://nypost.com/2025/10/23/business/us-national-debt-surpasses-38-trillion-for-first-time-in-history/
New York Post, August 2025 https://nypost.com/2025/08/13/business/us-national-debt-soars-past-37-trillion-years-sooner-than-expected/
Peter G. Peterson Foundation, November 2025 https://www.pgpf.org/programs-and-projects/fiscal-policy/monthly-interest-tracker-national-debt/
US Government Accountability Office (GAO), November 2025 https://www.gao.gov/americas-fiscal-future/how-could-federal-debt-affect-you?utm
Vanguard, July 2025 https://corporate.vanguard.com/content/dam/corp/articles/pdf/afi_perspectives_q3_2025_the_power_of_income.pdf