The Debt Crisis Is Getting More Dangerous-And You Will Feel It

For years, Americans have heard warnings about the national debt climbing into the tens of trillions of dollars.

The numbers have become so large that they barely register anymore.

Thirty trillion. Thirty-five trillion. Nearly forty trillion.

But the real danger may no longer be simply how much America owes.

It is how much America must now pay to keep borrowing.

The U.S. Treasury is selling 30-year government bonds at yields around 5.2%, potentially the highest borrowing cost for that maturity in roughly a quarter century.

That may sound like something only Wall Street investors should care about.

Because when the cost of borrowing rises for Washington, the effects eventually spread through the entire economy–from mortgages and retirement accounts to business loans, taxes and even America’s ability to respond to future crises.

The Debt Spiral Is Getting Worse

The basic problem is actually very simple.

Washington spends more money than it collects.

To cover the difference, the government borrows.

That borrowing creates interest payments.

When interest rates rise, those payments become more expensive.

Then Washington must borrow even more money–not only to fund current spending, but increasingly to service the debt it already accumulated.

That is how a debt problem begins feeding upon itself.

Interest on the public debt has already reached roughly $1.17 trillion this fiscal year, about 15% higher than a year earlier as Treasury borrowing costs have risen.

Think about what that means.

America is now spending extraordinary sums simply paying interest on money that was already spent.

That is not money building roads, strengthening the military, helping families or preparing for the next crisis.

It is the cost of yesterday’s borrowing.

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