The US federal debt has reached nearly $40 trillion, with approximately $3 billion spent daily on interest payments. This debt increase, combined with rising interest rates, may fuel demand for assets like gold and bitcoin.
Debt Growth
The federal debt has grown significantly, from $37 trillion in summer 2025 to $39.8 trillion by the end of July, with a legal limit of $41.104 trillion. The Congressional Budget Office forecasts a $1.9 trillion annual deficit for 2026, equivalent to 5.8% of the US GDP.
Interest Burden
The interest burden is substantial, with estimated payments of over $1 trillion in 2026, or around $2.8 billion per day. This exceeds the $898 billion allocated to defense in the CBO's reference projection.
Market Impact
As the US Treasury refinances its debt, it faces higher interest rates, with the 30-year Treasury bond yield above 5.2% and the 10-year yield approaching 4.7%. This increases the federal bill and the cost of credit for mortgages and businesses.
Debasement Trade
The growing debt contributes to the 'debasement trade,' where investors prefer assets perceived as rare, like gold and bitcoin, over currencies with potentially increasing supply. While bitcoin's price is not directly tied to debt growth, its limited supply of 21 million units makes it an attractive option for those seeking rare assets.
