The United States has officially crossed a daunting financial milestone: the national debt has surpassed $36 trillion. This staggering figure—more than 122% of the country’s gross domestic product (GDP)—has triggered widespread concern among economists, financial analysts, and investors alike. While national debt has always been a subject of debate, the sheer speed and scale of its recent growth have pushed it to the center of national and global discourse. With interest payments rising and fiscal discipline fading, many experts now view the debt burden as a serious threat to the long-term stability of the U.S. economy.
U.S. National Debt Hits $36 Trillion: A Growing Threat to Financial Stability
The Alarming Growth Trajectory
In just the past year, the U.S. government added nearly $3 trillion to the national debt, averaging about $1 trillion every quarter. This trend shows no sign of slowing down. According to data from the U.S. Treasury Department, the surge in debt stems from a combination of expansive fiscal policies, including stimulus spending, tax reductions, and continued borrowing to cover budget deficits. What was once a manageable concern has escalated into a full-blown fiscal challenge, with potentially irreversible consequences if left unaddressed.
One of the most concerning aspects of this trend is how debt accumulation has decoupled from actual economic growth. Historically, governments took on debt during times of crisis—such as wars or recessions—and reduced it during periods of expansion. However, the United States has continued to borrow heavily even during economic recovery phases. As a result, the debt-to-GDP ratio has ballooned to levels typically seen in post-war economies, with projections suggesting it could exceed 130% by 2035 if current trends continue.
Ray Dalio’s Dire Warning
Renowned billionaire investor Ray Dalio, who successfully predicted the 2008 financial crisis, has issued stark warnings about the dangers of America’s rising debt. In recent interviews, Dalio called the $36 trillion debt load the “biggest risk” facing the U.S. economy today. He emphasized that the government’s current path is unsustainable, especially in the face of rising interest rates that dramatically increase the cost of servicing debt. “We are approaching a tipping point,” he said, “where trust in the government’s ability to repay could erode, leading to a crisis of confidence.”
Dalio also pointed out that high levels of debt make the country more vulnerable to external shocks, including geopolitical tensions, trade disputes, or financial contagions originating in other markets. The more indebted a country becomes, the fewer tools it has available to stimulate its economy during downturns, and the higher the risk of a systemic crisis.
Who Holds the Debt?
Understanding who owns the $36 trillion in debt is key to grasping the potential consequences. Roughly one-third of the U.S. debt is held by foreign governments and investors, with China and Japan being the two largest creditors. The rest is held domestically, including by the Federal Reserve, institutional investors, pension funds, and individual bondholders.
This complex web of creditors creates a dual vulnerability. On one hand, any large-scale liquidation of U.S. treasuries by foreign holders—perhaps as a result of geopolitical conflict—could drive interest rates higher and destabilize financial markets. On the other hand, the reliance on domestic investors to absorb the debt burden may lead to “crowding out,” where government borrowing competes with private sector credit needs, driving up rates and stifling economic growth.
Rising Interest Payments: A Silent Killer
As interest rates rise globally to combat inflation, the cost of servicing the U.S. debt has increased dramatically. In 2024, interest payments on the national debt surpassed $1 trillion annually for the first time—now outpacing defense spending and becoming one of the largest line items in the federal budget. This trend is deeply troubling, as it limits the government’s ability to invest in critical areas such as education, infrastructure, and healthcare.
Interest payments are also uniquely damaging because they do not contribute to economic productivity. Unlike public investments, they simply transfer wealth from taxpayers to bondholders. This means that as debt and interest payments rise, more of the federal budget is locked into non-productive expenditures, weakening the government’s fiscal flexibility.
Political Gridlock and Lack of Fiscal Discipline
One of the key reasons behind the escalating debt crisis is the lack of bipartisan agreement on how to address it. Political polarization in Washington has made it nearly impossible to implement comprehensive fiscal reforms. While some lawmakers push for higher taxes on corporations and the wealthy, others demand spending cuts and reduced government intervention. As a result, temporary measures—such as raising the debt ceiling or approving short-term funding bills—have become the norm, while long-term solutions are repeatedly postponed.
This political dysfunction not only undermines investor confidence but also increases the risk of credit downgrades. In fact, credit rating agencies like Fitch and Moody’s have already issued warnings, suggesting that if the U.S. fails to implement sustainable fiscal policies, its creditworthiness could suffer in the coming years.
Implications for Global Markets
The U.S. dollar remains the world’s primary reserve currency, and U.S. treasuries are still considered the safest investment in global finance. However, the growing debt burden threatens to shake that foundation. If foreign investors begin to lose faith in the U.S.’s ability to manage its finances responsibly, the ripple effects could be felt across international markets. A weaker dollar, higher borrowing costs globally, and increased market volatility are all possible outcomes.
Moreover, as the U.S. government issues more debt to fund interest payments and cover budget gaps, it may eventually trigger inflationary pressures or force the Federal Reserve into more aggressive monetary tightening—both of which could negatively impact economic growth and employment.
The Road Ahead: Can the U.S. Reverse Course?
There is still time to avert a full-blown debt crisis, but action is urgently needed. Economists recommend a balanced approach: reducing unnecessary spending, implementing tax reforms that increase revenue, and promoting long-term economic growth to improve the debt-to-GDP ratio. Structural reforms in entitlement programs like Medicare and Social Security may also be necessary to ensure fiscal sustainability.
Additionally, increased transparency and long-term budgeting practices can help restore public and investor confidence. If done correctly, these reforms could help the U.S. stabilize its finances without triggering a recession or reducing essential public services.
Conclusion
The $36 trillion national debt is more than just a number—it’s a looming challenge that could define the future of the U.S. economy. While the country still enjoys the trust of global markets, that trust is not infinite. Without meaningful fiscal reforms and a renewed commitment to responsible governance, the United States risks entering a new era of economic instability, diminished global influence, and reduced prosperity for future generations. It’s a critical moment—one that demands action, leadership, and a long-term vision.