Milestone marks years of government spending that grew under both Donald Trump and Joe Biden
US debt reached $40tn for the first time on Wednesday, the US treasury department said, after the government deficit doubled over the last decade.
The treasury’s latest debt balance showed $40.047tn on Tuesday afternoon, the highest in US history.
The milestone marks years of government spending that grew under both Donald Trump and Joe Biden. During his first term, Trump approved $8.4tn worth of debt, with a huge chunk going to Covid-19 relief spending, while Biden approved $4.3tn worth of debt, according to the Committee for a Responsible Federal Budget.
Good luck buying food with the hyperinflation that’ll cause
I had an Econ professor in grad school who walked us through the calculation for exactly how much inflation it would cause to print enough cash to completely wipe the national debt. Granted this was 10 years ago, so it’d probably be worse now, but it was shockingly only ~15% inflation. That’s high, but not hyperinflation high. Especially since there are national interests in there having outstanding debt, so we’d never actually want to pay it all off like that.
Did the Econ professor also talk about the knock-on consequences if we did this? “Printing money” devalues the currency. Yes, we’d be honoring our debt holders by paying them back in the same number of dollars we borrowed, but our actions in doing this would be handing them back dollars worth significantly less than the dollars they handed us initially. We’d be financially burning every US Bond holder in the entire world (and many of those being US citizens holding government debt).
No one in the entire world would ever lend us money again at the cheap rates we get today. That would cost us trillions of dollars in additional interest we’d have to pay on future debt because the risk of us firing up the money printer would be priced into the very high interest rates investors would demand to buy US debt after that.