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The US federal governmentâs interest payments on national debt surpassed $1 trillion for the first time in fiscal year 2025. Interest expenditure now exceeds both defense spending and Medicareâa first in American history.
Wall Street analysts and social media users alike are invoking âWeimarâ as warnings of fiscal crisis mount. Meanwhile, the US Treasury is positioning stablecoins as a strategic tool to absorb the growing flood of government debt.
In fiscal year 2020, net interest payments totaled $345 billion. By 2025, that figure nearly tripled to $970 billionâoutpacing defense spending by approximately $100 billion. When accounting for all interest on publicly held debt, the figure crossed $1 trillion for the first time.
Source: US Congressional Budget Office via KobeissiLetter
The Congressional Budget Office projects cumulative interest payments over the next decade will total $13.8 trillionânearly double the inflation-adjusted amount spent over the past two decades.
The Committee for a Responsible Federal Budget warns that under an alternative scenario where tariffs are ruled illegal and temporary provisions of recent legislation are made permanent, interest costs could reach $2.2 trillion by 2035âa 127% increase from current levels.
The debt-to-GDP ratio has reached 100%, a threshold not seen since World War II. By 2029, it will surpass the 1946 peak of 106% and continue climbing to 118% by 2035.
Most concerning is the crisisâs self-reinforcing nature. The federal government borrows approximately $2 trillion annually, with roughly half going solely toward servicing existing debt. CRFB analyst Chris Towner warned of a potential âdebt spiralâ: âIf the people who loan us money get worried weâre not going to pay it all back, we could see higher interest ratesâwhich means we have to borrow more to pay interest.â
| Historic First | Year | Significance |
|---|---|---|
| Interest exceeds Defense spending | 2024 | First time since World War II |
| Interest exceeds Medicare | 2024 | Debt servicing now largest healthcare expense |
| Debt reaches 100% of GDP | 2025 | First time since WWII aftermath |
| Debt to surpass 1946 peak (106%) | 2029 | Will exceed all-time historical record |
Social media erupted at these projections. âThe trajectory is unsustainable if unchanged,â wrote one user. Another posted âweimarââa reference to 1920s German hyperinflation. âThe debt service era,â declared another, capturing the sentiment that America has entered a new phase.
The overwhelming majority called for flight to hard assetsâgold, silver, and real estate. Notably absent was little mention of Bitcoin, suggesting traditional âgold bugâ thinking still dominates retail sentiment.
Near-term, surging Treasury issuance absorbs market liquidity. With risk-free yields near 5%, equities and cryptocurrencies face structural headwinds. In the medium term, fiscal pressure may accelerate regulatory tightening and cryptocurrency taxation.
Long-term, however, presents a paradox for crypto investors. As fiscal instability deepens, Bitcoinâs âdigital goldâ narrative strengthens. The worse traditional finance performs, the stronger the case for assets outside the system becomes.
Washington has found an unexpected ally in its fiscal troubles. The GENIUS Act, signed in July 2025, requires stablecoin issuers to maintain 100% reserves in US dollars or short-term Treasury bills. This effectively transforms stablecoin companies into structural buyers of government debt.
Treasury Secretary Scott Bessent declared stablecoins âa revolution in digital financeâ that will âlead to a surge in demand for US Treasuries.â
Standard Chartered estimates stablecoin issuers will purchase $1.6 trillion in T-bills over four yearsâenough to absorb all new issuance during Trumpâs second term. This would exceed Chinaâs current Treasury holdings of $784 billion, positioning stablecoins as a replacement buyer as foreign central banks reduce US debt exposure.
Americaâs fiscal crisis is paradoxically opening doors for cryptocurrency. While conventional investors rush toward gold, stablecoins are quietly becoming critical infrastructure for US debt markets. Washingtonâs embrace of stablecoin regulation is not merely about innovationâit is about survival. The debt service era has begun, and crypto may be its unlikely beneficiary.
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