National debt and your dollar: what rising debt means for purchasing power.

The United States national debt has crossed $36 trillion as of early 2025. That's not a projection or a worst-case scenario. That's the actual balance the federal government owes right now. To put it plainly, the debt has more than doubled in the last decade alone, and the trajectory shows no signs of slowing.

For most people, these numbers feel abstract. Trillions are hard to visualize. But the consequences aren't abstract at all. When debt grows faster than the economy, when interest payments consume a larger share of federal revenue, and when the Federal Reserve adjusts rates to manage inflation, your savings, your paycheck, and your retirement accounts feel the impact. Understanding how national debt works and why it affects your money is no longer optional for anyone who wants to preserve what they've earned.

This article walks through what national debt actually is, how it's grown over time, what forces are driving it higher, and why it creates real pressure on the purchasing power of the dollar. We'll also look at why some investors turn to physical assets like gold and silver when debt levels reach historic highs.

National debt is the total amount of money the U.S. government owes to creditors. When the government spends more than it collects in taxes, it borrows to cover the difference. That borrowing adds to the debt.

The debt is divided into two categories: debt held by the public and intragovernmental holdings. Debt held by the public includes Treasury securities owned by individuals, corporations, state and local governments, foreign governments, and the Federal Reserve. According to the U.S. Treasury, this portion stood at roughly $28 trillion in early 2025. Intragovernmental holdings represent money the government owes to its own accounts, like Social Security and Medicare trust funds. That adds another $7 trillion or so.

When people refer to the national debt, they're usually talking about the total. The debt-to-GDP ratio offers a clearer picture of sustainability. As of 2024, U.S. debt was about 122% of GDP, according to the Congressional Budget Office. That means the government owes more than the entire economy produces in a year.

The national debt didn't balloon overnight. It's been building for decades, but the pace has accelerated sharply since 2000.

In 1900, the debt was roughly $2.1 billion. By 1980, it had reached $900 billion. Then came the deficits of the Reagan era, the dot-com bubble, the 2008 financial crisis, and the COVID-19 pandemic. Each event pushed the debt higher, and the reductions during economic expansions never kept pace.

The 2008 financial crisis was a turning point. The government stepped in with bailouts, stimulus programs, and emergency spending. The debt jumped from $10 trillion in 2008 to $14 trillion by 2011. The Federal Reserve also began buying Treasury securities in massive quantities, a process called quantitative easing, which kept interest rates low but also inflated the Fed's balance sheet.

Then came the pandemic. In 2020 and 2021, the federal government spent trillions on relief programs, unemployment benefits, and business loans. The debt surged from $23 trillion in early 2020 to over $31 trillion by the end of 2022. The speed of that increase was unprecedented in peacetime.

Since then, the debt has continued climbing, driven by mandatory spending on Social Security and Medicare, rising interest costs, and persistent deficits. The Congressional Budget Office projects the debt will reach $54 trillion by 2034 if current policies continue.

Debt itself isn't always destructive. Borrowing to invest in infrastructure, education, or technology can generate returns that outweigh the cost. But when debt grows faster than the economy and borrowing is used to cover routine spending rather than investment, the interest payments start to crowd out other priorities.

As of 2024, the federal government was spending over $800 billion annually just to service the debt, according to the U.S. Treasury. That's more than the entire defense budget. When interest rates were near zero in the 2010s, carrying large amounts of debt was relatively cheap. But as the Federal Reserve raised rates to combat inflation starting in 2022, the cost of borrowing soared.

Higher interest rates mean new Treasury securities must offer higher yields to attract buyers. That pushes up the government's borrowing costs. And because a large portion of the debt is held in short-term securities, higher rates translate into higher costs fairly quickly. The Congressional Budget Office estimates that interest costs will reach $1.7 trillion annually by 2034 if current trends hold.

Those interest payments don't build roads or fund research. They simply transfer money from taxpayers to bondholders. As that burden grows, it leaves less room for discretionary spending or tax cuts. Eventually, it forces a choice: cut programs, raise taxes, or borrow even more.

Several forces push the debt upward, and most of them operate on autopilot.

Mandatory spending makes up the largest share of the federal budget. Social Security, Medicare, and Medicaid account for nearly 50% of total spending, according to the Congressional Budget Office. These programs are set by law, and spending grows automatically as the population ages and healthcare costs rise. Without legislative changes, mandatory spending will continue increasing faster than tax revenue.

Discretionary spending, which includes defense, education, and infrastructure, makes up a smaller portion of the budget. But it still adds to deficits when revenues fall short.

Tax policy also plays a role. The 2017 Tax Cuts and Jobs Act reduced federal revenue by an estimated $1.5 trillion over ten years, according to the Congressional Budget Office. When revenues decline without corresponding spending cuts, deficits widen.

Economic downturns amplify the problem. Recessions reduce tax collections while increasing demand for unemployment benefits, food assistance, and other safety net programs. The 2008 crisis and the 2020 pandemic both led to massive temporary increases in spending, but the debt never returned to pre-crisis levels once the emergencies passed.

And then there's political gridlock. Cutting spending or raising taxes is politically painful. Congress has shown little appetite for either. The result is a path of least resistance that leads to perpetual deficits.

You don't hold U.S. debt directly, but you hold dollars. And the value of those dollars is tied to the government's ability to manage its balance sheet responsibly.

When debt levels rise, markets begin to question whether the government can sustain them. If investors lose confidence, they demand higher yields on Treasury securities to compensate for the risk. Higher yields mean higher borrowing costs, which add to deficits, which require more borrowing. That's a feedback loop with no easy exit.

At the same time, the Federal Reserve faces pressure to keep borrowing costs manageable. One way to do that is to keep interest rates low or to resume buying Treasury securities. But both actions increase the money supply, which can stoke inflation. More dollars chasing the same amount of goods and services means each dollar buys less.

Inflation erodes purchasing power. If your savings earn 2% interest but inflation runs at 4%, you're losing 2% of your real wealth every year. Over time, that compounds into a significant reduction in what you can afford.

The Federal Reserve managed to bring inflation down from its 2022 peak of 9%, but it remains above the 2% target as of early 2025. And as long as debt continues growing faster than the economy, the pressure to inflate remains. It's easier to pay off debt with devalued dollars than to cut spending or raise taxes.

The United States isn't the first country to face a debt crisis, and history offers some cautionary examples.

Japan's debt-to-GDP ratio exceeded 260% in 2023, according to the International Monetary Fund. The country has sustained this level for decades without defaulting, largely because the Bank of Japan owns a massive share of government bonds and interest rates have been near zero for years. But Japan's economy has grown slowly, and inflation remained stubbornly low until recently. The strategy works until it doesn't.

Greece provides a starker example. In 2010, Greece's debt reached 146% of GDP. Investors lost confidence, borrowing costs spiked, and the country entered a debt crisis. The European Union and International Monetary Fund imposed austerity measures in exchange for bailouts. The result was a lost decade of economic contraction, soaring unemployment, and widespread hardship.

Zimbabwe took a different path. Faced with unsustainable debt and budget deficits, the government printed money to cover shortfalls. Hyperinflation followed. By 2008, the inflation rate was estimated at 89.7 sextillion percent month-over-month, according to research by Johns Hopkins economist Steve Hanke. The currency became worthless, and the country eventually abandoned it in favor of foreign currencies.

The United States benefits from the dollar's role as the world's reserve currency. Other countries need dollars for trade and hold them as reserves, which gives the U.S. a level of financial flexibility that most nations don't have. But that privilege isn't guaranteed forever. If the dollar's dominance erodes due to fiscal instability, the consequences would be severe.

When debt levels are high and the purchasing power of currency is under pressure, investors look for assets that hold value independently of government policy.

Gold and silver have served that role for thousands of years. Unlike fiat currencies, they can't be printed at will. Their supply is limited by physical extraction, and they have no counterparty risk. You don't rely on a government or a central bank to honor a promise when you hold physical metal.

Gold has historically performed well during periods of high inflation and currency devaluation. According to the World Gold Council, gold prices rose more than 500% in the 1970s when inflation was elevated and confidence in the dollar was shaken. In the aftermath of the 2008 financial crisis, gold climbed from $800 per ounce in 2008 to over $1,900 by 2011 as central banks flooded the system with liquidity.

Silver follows a similar pattern, though it's more volatile due to its dual role as both a monetary metal and an industrial commodity. When inflation expectations rise or when investors seek alternatives to currency, silver tends to attract attention.

At Liberty Gold Silver, we help clients buy physical gold and silver held in their name, either stored in secure vaults or delivered directly. Unlike paper-based assets tied to financial markets, physical metals offer a tangible store of value. We don't push products or rely on high-pressure sales tactics. We lay out costs, explain options, and let you decide what makes sense for your situation.

The national debt won't disappear. The question is how it's managed and what that management means for the value of the dollar.

Congress could reduce deficits by cutting spending, raising taxes, or some combination of both. But politically, that's difficult. Social Security and Medicare are protected by broad public support. Defense spending is politically sensitive. And raising taxes is rarely popular.

Another option is economic growth. If the economy grows faster than the debt, the debt-to-GDP ratio stabilizes or declines. But that requires sustained, robust growth, which isn't guaranteed, especially as the labor force ages and productivity gains slow.

The Federal Reserve can also adjust monetary policy. Raising rates slows inflation but increases borrowing costs and risks triggering a recession. Lowering rates stimulates growth but risks reigniting inflation and further devaluing the dollar.

There's no easy answer. Each path involves tradeoffs, and all of them affect your purchasing power. That's why it's worth paying attention now rather than waiting for a crisis to force your hand.

Holding gold and silver isn't about betting against the economy. It's about diversification and having assets that perform differently than stocks, bonds, or cash.

When equities fall or when inflation spikes, metals often hold their value or rise. They don't pay dividends or interest, but they don't carry the risk of default, either. In an environment where debt is high, deficits are persistent, and the Federal Reserve is navigating between inflation and recession, that stability matters.

Liberty Gold Silver offers straightforward access to physical metals. You choose what you want to buy, we quote the price with all costs included, and you decide whether to store it in a vault or take delivery. Everything is in writing before you commit. No scripts. No surprises.

For clients interested in retirement accounts, we also help set up precious metals IRAs. These accounts allow you to hold physical gold and silver within a tax-advantaged structure, giving you another option for diversifying retirement savings outside of traditional stocks and bonds.

If you're thinking about adding metals to your holdings, start by understanding your goals. Are you protecting against inflation? Hedging against currency risk? Diversifying away from paper assets? The answer shapes what you buy and how much.

Gold tends to be more stable and is viewed primarily as a monetary asset. Silver is more volatile but also benefits from industrial demand, particularly in solar panels, electronics, and electric vehicles. Both have a place depending on your objectives.

Storage is another consideration. Vault storage keeps your metals secure and accessible without the logistics of safeguarding them yourself. Direct delivery gives you physical possession but requires planning for security and insurance. We walk clients through both options so you can choose what fits your situation.

And finally, timing. Metals don't move in straight lines. Prices fluctuate based on interest rates, inflation expectations, geopolitical events, and market sentiment. But over the long term, they've preserved wealth through periods when currencies failed to do so.

The national debt isn't an abstract policy issue. It's a structural challenge with real consequences for the purchasing power of the dollar and the financial stability of the country. When debt grows faster than the economy, when interest costs consume more of the federal budget, and when the Federal Reserve faces impossible choices between inflation and recession, it's worth asking what assets will hold value.

Gold and silver have answered that question for thousands of years. They've outlasted empires, currencies, and economic systems. They don't rely on promises or policy. They are what they are.

At Liberty Gold Silver, we help people buy physical metals, store them securely, and integrate them into a broader financial strategy. If you're ready to explore what that looks like for your situation, we're here to answer questions and put everything on paper before you decide. No pressure. Just facts.