$38Tn

The U.S. total debt has reached $38Tn. The current pace of increase is roughly $25 billion per day. This rate accounts for the accelerated borrowing in recent months, which has averaged around $400-500 billion per month. And if this pace is maintained, we will reach $40 trillion by January 11, 2026, in just 80 days. In contrast, annualized projections for full-year 2025 nominal GDP point to $31 trillion, extrapolating recent quarterly trends. That implies a 122% debt to GDP ratio. Interest expense is already above defense spending, reaching $1.161Tn. Since 21% of the total debt is in T-bills ($6.4Tn), the Treasury and the President desperately need a rate cut next week and another one in December. That will significantly reduce the cost of debt in dollar terms. But the real problem continues to be government spending, and that’s not going to change. There are two ways the U.S. will get out of this problem: (1) through financial repression, increasing the rate of inflation to deflate the debt, or (2) through a radical increase in productivity, namely AI. Which one do you think will come first?

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