America’s debt spiral could devolve into a fiscal crisis or hyperinflation, several economists say.
The U.S. federal government has borrowed so much money that, over the past year, it has had to spend one-fifth of all the money it collected just on debt interest—which came to almost $880 billion.
Americans paid some $450 billion less in income taxes for the year, trapping the government in the pincers of a fiscal crunch.
The country teeters on the brink of a debt spiral that could devolve into a fiscal crisis or hyperinflation, several economists told The Epoch Times.
“The problem is serious because, any way you cut it, taxpayers are paying interest on the mountain of debt that has been accumulated,” said Steve Hanke, a professor of applied economics at Johns Hopkins University. “In short, they are paying something for nothing.”
Congress must dramatically curb deficit spending to instill confidence in investors—who seem to be losing faith in America’s ability to satisfy its obligations, some suggest.
“Deficit spending by the U.S. government is in a runaway scenario,” said Mark Thornton, a senior fellow at the classical liberal Mises Institute. “The amount of money that they’re borrowing is at extremely elevated levels and there doesn’t seem to be any regulation or even mild attempts to curb the spending side of the fiscal equation.”
Gigantic Debt
Government debt stood above $33 trillion in fiscal year 2023 (the 12 months that ended on Sept. 30). That’s about $1.7 trillion more than the year before. Interest on the debt has been growing steadily for decades, although at a relatively slow pace to about $570 billion in 2019 from about $350 billion in 1995—an annual increase of some 2 percent.
With the explosion of government spending during the COVID-19 pandemic and the subsequent interest rate increases by the Federal Reserve, the debt cost has skyrocketed by more than 50 percent between 2019 and 2023. Over the past year, it has already surpassed the entire military budget.
The cost is expected to keep growing as old debt issued at low interest rates matures and is rolled over into higher rates.
By Petr Svab
