In the United States of America, interest payments alone, are now greater than the entire military defence spending. Just the interest on federal debt (which is nearing $33,000,000,000,000 / $33-Trillion) is now around $900,000,000,000 / $900-Billion per year. If you do that math, that implies an interest rate of 2.73%.
With such a ridiculous amount of debt, even at an artificially low interest rate like 2.73%, the interest still adds up to more than $900-Billion.
But what would, say 6% interest, look like on $33-Trillion of debt? That would be almost exactly $2-Trillion of interest per year.
Keep in mind the IRS only take in a total of $4-Tillion each year (total gross taxes collected less refunds). With $4-Trillion in taxes, $2-Trillion in potential interest expenses would represent 50%, in interest payments alone.
How much is $2-Trillion per year? To put it in perspective, here are the 5 largest budget items in the USA:
- Social Security $1,219-Billion
- Health $914-Billion
- Income Security $866-Billion
- National Defense $766-Billion
- Medicare $755-Billion
The US federal government spent a total of $6-Trillion in 2022, with a deficit of $1.4-Trillion. Now if its interest payments go from $0.9-Trillion to $2-Trillion, that would be a doubling of its deficit. Again, this is interest-only, meaning we haven’t even discussed how the US could figure out a way to ever pay back the principal owing ($33-Trillion).
In other words, the US has a debt crisis.
We believe this bodes poorly for the US Dollar, and positive for gold, silver, copper, and other commodities.
Billionaires David Sacks and David Friedberg recently showcased this problem on their All-In Podcast. Crescat Capital’s Kevin Smith, Quinton Henigh, and Tavi Costa just spoke about this very issue as well.
