In a recent market analysis, Tone Vays shines a piercingly detailed spotlight on the looming financial crisis threatening economic stability that many seem unaware of – the ever-mounting burden of net interest on U.S. government debt. That is, the interest the U.S. Treasury Department pays on borrowed money has been growing at a frightening rate, significantly veering off previously estimated trajectories.
In fiscal year 2022, the initial estimate for net interest spending was $304 billion. The final expenditure ended up at a staggering $476 billion, overshooting estimates by an astounding $172 billion. By May 2023, the figure for the current fiscal year has already climbed to $424 billion, with four more months to go. One could reasonably anticipate a net interest spending of more than $525 billion by year-end.
These figures have significant implications for the U.S. economy. This level of debt was not anticipated until 2026, according to earlier projections by the U.S. Government. Yet, here we are, three years ahead of schedule. The premature arrival of these numbers doesn’t bode well for anyone, certainly not for Americans already struggling.
As Vays points out, U.S. net interest payments are not just growing; they’re growing exponentially (represented below). In fact, they represent the only budget item that is expanding at such a rate.
RIGHT: Red Line Represents Vays Calculation
The gravity of the situation is underscored by additional analysis that shows in October 2022, the government was paying $30 billion per month in interest payments. A year and a half later, that figure has doubled to $61 billion.
Following this trajectory it is conceivable that the government will be paying more than $100 billion per month on interest payments alone by this time next year. The accelerating pace at which these payments are growing could mean that we may soon see the number doubling every few months. Kind of terrifying.
Vays outlines a case in which net interest payments represent a $1.6 Trillion line item in the US budget.
It’s hard to imagine what a trillion dollars looks like; we reframed it into time:
- 1M seconds = 12 days ago
- 1B seconds = 32 years ago
- 1T seconds = 32,000 years ago
This pattern raises an existential question: how can the U.S. sustain itself under the weight of these rapidly multiplying financial obligations? The concern is not a hypothetical one. The figures are very real and, if unchecked, could have profound implications for the future of the American economy.
Vays’ analysis serves as a wake-up call to confront the looming crisis head-on. These escalating net interest payments undeniably threaten the nation’s economic stability. He’s not the first to suggest things could start to look like Weimar.
“It’s theft with big numbers.”
Lennart Lopin, co-founder & CTO, Byte Federal
You view the U.S. Debt Clock in real-time here.
You can also view Tone Vays’s original data, which he made public, here.
