- Government debt is rising in the US and across wealthy nations, creating growing risks for the global economy.
- Higher borrowing and rising interest costs are straining budgets, currencies, and long-term financial stability.
- Protecting your finances with physical gold can help safeguard savings during periods of debt and currency pressure.
The Global Debt Squeeze
While attention shifts from one crisis to the next, government debt continues to grow in the background. As it quietly and relentlessly expands, debt now stands among the most serious risks to the United States and the global economy. With borrowing increasing and interest costs rising, the burden is becoming harder to contain.
In the United States alone, the national debt has reached over $38 trillion, roughly 125% of GDP. The debt burden is reshaping how the federal budget works and where money goes. Out of control debt was once the hallmark of third world nations. Now, wealthy nations, including Britain, France, Italy, and Japan, are facing the same simmering crisis. Together, these rising debt levels are affecting markets, currencies, and everyday costs across the globe. 1
Interest Costs Are Taking Over the Budget
One of the clearest signs of stress is how much the US government now spends just to pay interest on its debt. According to new Treasury data, net interest payments totaled $270.3 billion in the first quarter of fiscal 2026, which ran from October through December 2025. Interest payments are now higher than defense spending, which came in at $266.9 billion during the same period.2
Interest spending has surged because high interest rates raise borrowing costs for the federal government. Since the Federal Reserve is in no rush to cut rates, interest payments are going to be one of the fastest growing budget items for years to come.
A Sharp Rise Since the Pandemic
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Interest spending in fiscal 2025 was 2.5 times higher than pre pandemic levels in 2019. The Congressional Budget Office projects net interest payments will reach $1 trillion in fiscal 2026 and total $13.8 trillion between fiscal 2026 and fiscal 2035.4
Global Debt Pressures Are Growing
The debt problem is not limited to the United States. Rising global debt is now centered in wealthy nations, posing risks to global growth and financial stability.
As governments borrow more, interest rates tend to rise because buyers demand better returns to compensate for growing perceived risk. Rising interest costs increase expenses for business loans, consumer debt, mortgages, and credit cards. They also fuel inflation because higher costs get passed on through higher prices. Large debts limit how much governments can respond to crises such as recessions, pandemics, wars, or climate related disasters.
Harvard economist Kenneth Rogoff warned that Washington has become “addicted” to using debt as a “free lunch” to “borrow its way out of trouble,” and that repeatedly “jumping” public debt higher after each crisis leaves far less room to “save up for the next one,” limiting governments’ ability to spend big and fast in future emergencies.5
Europe and Japan Face Their Own Strains
Across Europe, governments face growing pressure to invest more just to remain competitive. Even as aging populations drive higher demand for healthcare, pensions, and public services. Britain must modernize aging infrastructure while also funding a strained national healthcare system. Weighed down by debt that’s 138% of GDP, Italy is facing difficult spending choices that have sparked public protests. France continues to struggle with political gridlock, resistance to pension reforms, and a recent credit rating downgrade. All of which are adding to financial uncertainty across the region.
Japan faces a different challenge. Its debt exceeds 200% of GDP. The country relied on near zero interest rates to manage costs. But the Bank of Japan began tightening policy in 2024. Rising yields have caused bond selloffs and higher borrowing costs. Japanese investors, who are the largest foreign holders of US Treasuries, may reduce US bond purchases if domestic yields become more attractive.6
The Dollar and Gold
Debt concerns directly affect currencies. The US dollar index fell to a four-year low. It is weighed down by concerns over US policy unpredictability and signals that Washington may tolerate a weaker currency. The greenback has declined more than 9% in 2025 as confidence in the currency erodes.7
As confidence in paper currencies weakens, investors often turn to assets that have held value over time. This environment has helped fuel a massive surge in gold prices. Gold is widely seen as a store of value during periods of debt stress and currency pressure.
Conclusion
Rising debt, higher interest costs, and pressure on the dollar are reshaping the financial landscape. For many Americans, this has led to a renewed focus on protecting long term savings.
If you want to protect your nest egg with a Gold IRA, contact American Hartford Gold at 800-462-0071. Our specialists can help you understand how physical gold may fit into your strategy during a time of growing national and global debt.
