As the US Treasury Runs Out of Creditors, Its Options Dwindle

Are the chickens coming home to roost for the US Treasury? As Ryan McMaken noted in a recent Mises Wire article, the United States is in a debt spiral and there’s no easy way out.

The problem is multifaceted, but the origin is profligate government spending. While it typically spikes during crises, spending is increasing at an alarming rate even outside of crisis periods. And tax revenues are not keeping up, which means ever-deepening deficits. Government expenditures spiked during the 2020 crisis, but even ignoring those spikes, annual spending has increased by about $1.6 trillion since 2019, while tax receipts have only increased by about $600 billion.

The government must borrow to make up the difference, which has led to a mountain of debt. Total public debt has ballooned to over $32 trillion, which is over 180 percent of gross domestic product (GDP), excluding government spending and transfers.