How We Got Caught in the US Debt Fight

One internal dynamic is a very large number — $36 trillion is the current amount of debt in the US, and it’s getting more expensive to service. In 2021, the interest costs on the debt were just under $0.6 trillion, and last year’s interest costs increased to nearly $1.2 trillion.

These interest costs now exceed the cost of the entire US military interest costs. Without aggressive intervention these costs will continue to rise as lower cost bonds expire and need to be replaced at current interest rates.

This significant internal challenge may help explain the urgency associated with Elon Musk’s cost cutting efforts. The comfort with creating economic instability may have the side benefit of lowering interest rates. 

This is a high stakes game, and we will likely see a few more rounds like we witnessed last month, so to use a tired phrase: the only certainty is more uncertainty.