Is the US's rising debt a problem?

 Is the US's rising national debt a problem?

Essentially, national debt is basically the amount the government owe to the private sector and other holders of US Treasuries. It is the accumulation of government borrowing over many years. The graph above shows national debt as a percentage of gdp. Through these figures on national debt, we can see major events in American history. For example, world war 2 saw US debt reach its apogee at over 113% of GDP as the government undertook massive military spending.

Okay, sure that sounds good and all. But more importantly, what is the current situation like? The US federal (comes from national gov) debt to gdp ratio was about 125% early 2025, which crowns the US at 6th on the current debt to gdp ratio standings. National debt is over $36 trillion, with specific figures often updated daily, which is around 100 times the net-worth of Elon Musk.

Why is having over $36 trillion in debt is a bad thing? 3 main points.

1. Rising interest rates

• As debt increases, the interest rate increases because bondholders are more weary of defaults. 
• Higher interest payments crowds out other government spending (opportunity cost)
• Take the UK for example, we spend about £100bn in debt financing each year. There is so much we could do with that money instead.
• More specifically, and perhaps the most important point I'll be mentioning, is that due to the reduction in certainity and confidence about the US market, many investors have been running away from the US dollar. 
• If less people hold the dollar, there are three main problems. Imported goods become more expensive, fueling inflation. US borrowing costs will rise further, since a weaker dollar makes Treasuries less attractive to foreign investors. And, perhaps what trump cares most about, global trust in the dollar as the reserve currency could be undermined, reducing dominance.

2. Crowding out private Investment

• As the government borrows more, interest rates rise further
• This not only just affects public finance but also private economic activity.  For example, the congressional budget office estimates that each 1% increase in the debt to gdp ratio drives up real 10-year interest rates by around 0.02 percentage points, and that every extra dollar of federal deficit reduces private investment by roughly 33 cents.
• This is a double hit: not only does servicing the debt get more expensive, but growth is also stunted by weaker capital formation in businesses and infrastructure, future productivity takes a direct hit.

3. Fiscal dominance and inflationary pressures

• Interestingly, when debt levels climb relentlessly, a dangerous-ish dynamic called fiscal dominance can emerge: the central bank (the Fed) may lose its ability to raise interest rates without stimulating more government debt interest payments. 
• In such instances, raising rates to combat inflation paradoxically injects more spending power into the economy, fueling even higher demand and inflation.
• However, this undermines monetary policy effectiveness and risks a spiral of inflation that’s hard to break, especially when the central bank’s primary aim becomes managing debt costs instead of stabilising prices.

As I didnt completely have enough time to go into a bit more detail(school starts in an hour...). I'll promptly conclude. Okay so, The US’s rising national debt poses serious risks beyond its sheer size. Higher interest costs crowd out public spending, private investment is weakened, and inflation control becomes harder for the Federal Reserve. Without fiscal discipline, today’s borrowing could become tomorrow’s crisis and many economists worry when this "tommorow" going to be. Tommorow? 10 days? OR 10 years? If debt gets to such a high level, around 170% is where many economists start getting worried, what are the action plans gonne be then? Who will bail one of the largest econonmies in the world?

A lovely video- https://www.youtube.com/watch?v=Xi7RvweuIUk