US National Debt Surpasses $40 Trillion

The Federal government of the United States has seen its national debt exceed $40 trillion, reaching 120 percent of the country's gross domestic product. This debt level now surpasses the peak recorded during the Second World War.

Federal revenue currently allocates 19 percent to debt service. The Congressional Budget Office estimates that if net interest averages 2.5 percentage points higher than baseline assumptions, debt interest payments could consume 100 percent of all federal revenue by 2055.

Analysis indicates that the Federal Reserve System creates a moral hazard by acting as the buyer of last resort through open market operations, which encourages continued spending by the United States Congress. There are concerns that U.S. elites may accept persistent inflation of 3-4 percent as a necessary tradeoff to prevent a total fiscal calamity and the bankruptcy that would occur if interest rates were left to float according to free market pressures.