$40 Trillion National Debt: Is the USA Going Bankrupt

Thank God, no, we aren't going bust as a nation, despite our gargantuan $40 trillion national debt.

The rapid pileup of debt under Republicans and Democrats alike is certainly a disgrace and worrisome. When I came to Washington in the mid-1980s, our debt hit $1 trillion for the first time. It seemed like a tidal wave of red ink. Forty years later, we're at $40 trillion.

That's a big and scary number. But our national wealth is roughly $180 trillion. So our debt-to-asset ratio, which has been rising, is still less than 25%, and much lower than at the end of World War II, when the debt hit 40% of wealth.

We haven't been borrowing to fight a war, but the main point is that even with a debt overhang that was a lot larger than today, we had a post-WWII boom.

That's not all. Almost $8 trillion of that debt is money the government owes to itself. For many years Congress has been stealing money from "trust funds" like Social Security. It's accounting hokey pokey, and if a private company raided a pension fund like this, they'd lock up the CEO for fraud. But this isn't debt owed to the public or foreigners. It would be like a wife loaning money to a husband. The money has to be paid back -- but to ourselves.

The main way to limit the negative impact of the debt is through growth, prosperity and a rise in asset values. What matters most for a household, a business or a government is how much debt you owe relative to how much you have in the bank and how valuable your other assets that you can use to pay it back are.

This means that any reform that lowers the growth rate of the economy, like a major job-killing tax increase, is likely to fail in solving the debt problem -- and it may make it worse. These reforms also fail to acknowledge that we have more revenue coming in to the Treasury today than ever before.

Tax increases will only give Congress the green light to spend and borrow more money. As Ronald Reagan used to say, never give a drunk another drink.

We should also never forget the advice of the late Milton Friedman, who used to say that he'd rather have a budget half as large as it is with a budget deficit than a balanced budget with government spending twice as large.

I asked Grok how to get rid of the debt, without hurting the citizenry and I didn’t care how mean he had to be.

His answer:

Understood. You want options that are colder and more ruthless while still trying to shield ordinary citizens as much as possible.

Here are the meanest realistic levers that governments with their own currency have actually used or seriously considered. None are cost-free, but they shift the pain toward creditors, future generations, foreigners, or diffuse/invisible channels rather than immediate tax hikes or benefit cuts on current voters.

### 1. Controlled (or not-so-controlled) inflation / debt monetization
- The central bank keeps policy loose and finances deficits by expanding the balance sheet.
- Nominal debt stays the same; the real value shrinks as the currency loses purchasing power.
- Ordinary people feel it as higher prices, but the hit is gradual and hard to pin on any single decision. Savers, bondholders, and fixed-income recipients take the largest real losses.
- This is the classic historical method. It is mean because it is a stealth tax that falls hardest on people who did the “responsible” thing and saved.

### 2. Financial repression
- Force domestic institutions (banks, pension funds, insurance companies, money-market funds) to hold large amounts of government debt at artificially low interest rates.
- Cap or tax alternative safe assets so capital has nowhere else to go.
- Savers and future retirees effectively subsidize the government through lower returns. The average worker may not notice immediately if wages and prices adjust, but the long-term cost shows up in thinner retirement accounts and weaker private investment.

### 3. Discriminate against foreign and institutional holders
- Keep servicing retail/domestic household debt and Social Security/Medicare trust-fund holdings while restructuring or imposing losses on foreign central banks, large foreign investors, and certain institutional holders.
- Use regulatory, tax, or legal tools to make foreign-held Treasuries less attractive or to change terms selectively.
- This is geopolitically mean and risks higher future borrowing costs and a weaker dollar, but it tries to protect the median citizen’s direct holdings.

### 4. Grow the denominator aggressively while freezing the numerator in real terms
- Run hot fiscal and monetary policy aimed at nominal GDP growth well above interest rates for a prolonged period.
- Combine with regulatory or tax changes that favor domestic production and investment over pure financial engineering.
- The debt-to-GDP ratio falls even if the nominal debt keeps rising. The “meanness” is that it accepts higher inflation and potential asset bubbles as the price of eroding the relative burden.

### 5. One-time or recurring wealth/ asset transfers that are politically opaque
- Large-scale sales or long-term leases of federal land, spectrum, mineral rights, or other assets, structured so the proceeds retire debt.
- Special assessments or windfall mechanisms aimed at very large balance sheets rather than wage earners.
- These are less stealthy but can be designed to hit concentrated wealth more than broad citizenry.

### Hard constraint
Any path that actually reduces the real burden without explicit default still transfers resources from someone. The least visible methods (inflation + financial repression) have been the preferred “mean” toolkit precisely because the costs are diffuse, lagged, and easy to blame on “markets,” “greed,” or “supply shocks.”

There is no mechanism that makes $40 trillion disappear while leaving every citizen’s real wealth, purchasing power, and future claims completely untouched. The mean versions simply choose *which* groups absorb more of the loss and how slowly the bill arrives.

If you want the version that maximizes opacity and minimizes immediate voter pain, the combination of persistent moderate-to-high inflation plus financial repression is the one with the longest historical track record.

AI Overview:

Highest Total Debt (in U.S. Dollars)

Measured by raw dollar amounts, large global economies top the list:

United States: $40.7 trillion
China: $22.3 trillion
Japan: $9.0 trillion
United Kingdom: $4.4 trillion
France: $4.3 trillion

Highest Debt-to-GDP Ratio

Measured by how much a government owes compared to what its economy produces, Japan leads major nations.

Japan: ~204% to 237% of GDP
Sudan: ~187% to 272% of GDP
Singapore: ~171% to 173% of GDP
Italy: ~137% of GDP
United States: ~124% of GDP

This is debtwashing. Yes, the debt is high but the Democrats did it too.

Funny how the guy who ran six businesses into bankruptcy is now on his seventh.
1. Trump Taj Mahal (1991)

2. Trump Castle (1992)

3. Trump Plaza Hotel (1992)

4. Trump Hotels and Casinos Resorts (2004)

5. Trump Entertainment Resorts (2009)

6. Trump Entertainment Resorts (2014)

I am kind of shocked the post isn’t blaming immigrants.

However, you know in your dark souls the real problem; the BBB is not benefiting normal folks at all. In fact, it is making life unaffordable but it is helping the .1% Epstein class so bravo and you’re paying for it.

How’s that for winning the culture wars and owning the libs?
It scares me that people that are too stupid to realize they live on their knees vote counts the same as mine.

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