There is hope. Between Republican control of both chambers of Congress and President Donald J. Trump reentering the Oval Office in three weeks, it’s not time to panic. But there needs to be real actions taken to not only raise the debt ceiling but to dramatically cut spending. Unfortunately, the latter may not be in the cards.

The United States is on a collision course with a potential default on its national debt, an event poised to significantly undermine its credit rating and unleash economic turmoil across global markets. This looming crisis is centered around the contentious issue of the debt ceiling, sparking widespread concern among investors, policymakers, and international allies.

The federal debt limit, due to be reinstated on January 1, 2025, sets the stage for a critical financial challenge. With the Treasury Department’s extraordinary measures expected to deplete by mid-2025, there’s an urgent call for Congressional action to either raise or suspend the ceiling to avoid default. Treasury Secretary Janet Yellen has highlighted the gravity of the situation, urging lawmakers to protect the full faith and credit of the United States.

A default would not only question the reliability of U.S. Treasuries, traditionally seen as the bedrock of international finance with zero credit risk, but also lead to a potential sell-off of U.S. securities. Such an event could increase borrowing costs globally and might even push the U.S. into a recession, affecting millions of jobs and household wealth.

This is the path through which de-dollarization can ascend. BRICS nations have diligently been working to usurp the U.S. Dollar with their own currencies. Meanwhile, non-BRICS nations who have relied on the U.S. Dollar are seeking cover. This is why alternative forms of value such as cryptocurrency and precious metals are becoming increasingly popular.

Historically, the U.S. has faced similar scenarios, like in 2011 when political brinkmanship led to a downgrade of the U.S. credit rating by Standard & Poor’s. Although the situation was resolved before reaching default, the mere threat caused economic ripples. The implications of a 2025 default could be far more severe, with Moody’s already signaling a negative outlook on U.S. debt amidst rising deficits and interest rates.

The global economy’s reliance on U.S. economic stability means that any default would have far-reaching effects. Countries with economies tied to the U.S. dollar could see their own financial systems destabilized, and the trust in U.S. financial instruments could wane, leading to a reevaluation of global investment and trade strategies.

In response, some experts advocate for structural reforms to manage U.S. debt more sustainably, while others emphasize the need for immediate, bipartisan action in Congress to avert the crisis. The situation underscores the delicate balance between fiscal policy, political will, and economic stability, highlighting the stakes involved not just for America but for the world’s financial landscape.

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Article generated from corporate media reports.

This marks a $5 trillion increase since 2023 alone. Looking ahead, debt levels are projected to increase faster than previously expected as government policies fail to address debt risks amid aging populations and increasing healthcare costs. Going further, rising geopolitical tensions could lead to higher spending on defense, adding strain to government budgets.

This graphic, via Visual Capitalist’s Dorothy Neufeld, shows government debt by country in 2024, based on data from the IMF’s October 2024 World Economic Outlook.

Ranked: Government Debt by Country

As the world’s largest economy, the U.S. debt pile continues to balloon, accounting for 34.6% of the world’s total government debt.

Overall, net interest payments on the national debt soared to $892 billion in the 2024 fiscal year. By 2034, these costs are forecast to reach $1.7 trillion, with total net interest costs amounting to $12.9 trillion over the next decade. A rising mountain of debt and higher interest rates are among the primary factors driving up net interest costs.

Below, we show the gross government debt of 186 countries worldwide in 2024:

*The above table uses IMF data from October 2024, however, the most current up-to-date number for U.S. government debt is $36.1 trillion based on data from the U.S. Treasury for December 12, 2024.

China, ranking second globally, holds 16.1% of the world’s government debt.

Over the next five years, China’s debt to GDP ratio is projected to hit 111.1% of GDP, up from 90.1% in 2024. Going further, Chinese officials recently stated they are prepared to deploy stimulus measures to support the economy if Trump imposes sweeping tariffs on goods imported from China. As a result, China’s debt to GDP could rise even faster than current projections.

India, ranked seventh globally, has amassed $3.2 trillion in debt, an increase of 74% since 2019. However, thanks to its strong economic growth and fiscal policies that are increasing government revenues, debt as a percentage of GDP is projected to fall gradually from 83.1% in 2024 to 80.5% by 2028.

In Europe, the UK has amassed the most debt, about $3.65 trillion, equal to 101.8% of GDP. This is far higher than the regional average, standing at 77.4% of GDP in 2024. Europe has a lower debt to GDP than North America and the Asia-Pacific, but European budgets likely face increasing pressures looking ahead, due to sluggish economic growth, trade wars, and aging populations.

A Regional Outlook for Global Debt

Below, we show how government debt by region is projected to change over the next five years:

As we can see, average debt by country in North America is set to swell to 125% of GDP, the highest across global regions.

With governments increasingly using stimulus measures to boost the economy, it poses a greater threat to fiscal sustainability. In order to stabilize debts, the IMF stated that major spending cuts and tax hikes are needed over the next five to seven years.

Like North America, debt to GDP ratios are set to increase across Asia, Europe, and the Middle East.

Overall, world government debt is projected to exceed 100% of global output by 2029, driven by several large countries including the U.S., China, Brazil, and France, among others.

To learn more about this topic from a forward-looking perspective, check out this graphic on G7 government debt projections over the next five years.

If you are old enough, you can still remember a time when many middle class families would purchase a new vehicle every few years.

Sadly, today most of us are being forced to get as much mileage out of our rapidly aging vehicles as we possibly can.  As a result, the average age of the passenger vehicles traveling America’s roads has reached an all-time record high…

This should be the best of times for the people who help keep America’s cars running.

There have never been as many on the road—around 290 million light vehicles—and they have never been so old. One reason for that is good news: They are better made. Getting the odometer past 100,000 miles has gone from being noteworthy to normal. Thirty years ago the average passenger car was about 8.4 years old and today that is 13.6 years.

Even keeping our aging vehicles repaired has become exceedingly difficult.

These days, if the mechanic hands you a repair bill for less than a thousand dollars that is a reason to celebrate.

In the old days, you could get a really nice used vehicle for a thousand dollars.

Of course groceries have become insanely expensive as well.  Earlier today, I came across a USA Today article that discussed the fact that the average household in Miami spends 327 dollars at the grocery store per trip…

Many longtime Miamians say they’ve felt this way since the pandemic transformed much of their city. As New Yorkers and Californians faced lockdown orders and restrictions, many flocked to Florida, with the largest increase of New Yorkers moving to Miami where they could benefit from tax and mandate breaks while working remotely. But along with having the largest net population gain of any state in the country came exploding living and housing costs. Housing prices have risen almost 50%, according to the UBS Global Real Estate Bubble Index released last month.

Grocery prices shot up. (An average household spent about $327 per trip). So did electric bills. A carton of eggs last year cost $5.

327 dollars used to be a lot of money.

Now it will just buy you one cart of food.

I warned my readers that the economic conditions that we were witnessing in Venezuela would eventually come here, and now it has happened.

As I discussed a few days ago, core consumer prices have actually risen for 53 months in a row. Our cost of living crisis is out of control, and there is no end in sight.

As they struggle to pay their bills, many Americans are turning to credit cards for some relief. As a result, credit card debt balances have soared to record high levels…

The average American household credit card balance as of the third quarter of 2024 was about $10,757 after adjusting for inflation, according to a new study.

The personal-finance website WalletHub onFriday released its new Credit Card Debt Study, which found that consumers added $21 billion in debt during the third quarter of 2024.

Early results for the fourth quarter of the year show preliminary data for October at a new record high for credit card debt in the month, in absolute terms.

As credit card debt levels rose, it was inevitable that more Americans would start getting behind on their payments, and that is precisely what has happened…

Are you feeling financially stressed as 2024 comes to a close? You’re not alone, not even close. In fact, 7.8 million Americans have delayed payments on at least one of their credit accounts this year. That’s a million more than in 2023.

This is really bad news for the economy as a whole, because our economy is highly dependent on consumer spending.

You can’t get blood from a stone, and restaurants all over the country are learning the hard way that most consumers simply cannot afford to eat out as regularly as they once did…

Seafood giant Red Lobster, Italian chain Buca di Beppo, fish taco eatery Rubio’s Coastal Grill and the owner of burger and pizza chains BurgerFi and Anthony’s Coal Fired Pizza are among those that have sought to reorganize through bankruptcy this year. Hooters of America is also huddling with lenders and advisers amid revenue declines, Bloomberg reported.

Shares of Dine Brands Global Inc., the parent of Applebee’s and IHOP, are down about 30% year-to-date, while shares of Bloomin’ Brands Inc., which owns Outback Steakhouse, dropped to near 2020 lows last month after it reported a decline in US same-store sales.

Yes, a “restaurant apocalypse” has begun.

When I first started using that term, a lot of people thought that I was exaggerating.

But of course I was not exaggerating one bit.

There was a time when it seemed like just about anyone in this nation could achieve “the American Dream” if they just worked hard enough.

But now we have reached a point where only 31 percent of Americans believe that they have “made it” in life…

Despite being the land of opportunity, the American Dream remains frustratingly out of reach for most Americans, with a mere 31% believing they’ve financially “made it” in life.

Sadly, that figure is even lower for Baby Boomers…

However, the picture becomes less optimistic with age. Only 27% of baby boomers feel they’ve reached financial success, and among those who haven’t, just one-third believe they ever will. The survey found that Americans consider their path to financial success threatened by various external factors, including presidential elections (46%), interest rate changes (45%), and the job market (42%).

After working so hard for so many years, only 27 percent of Baby Boomers feel like they have “made it” in life.

Well, that is quite depressing.

Things could have turned out far differently.  Many of us ranted and raved for years that things would turn out this way, but most of the country did not want to listen.

Bad decisions lead to bad results.

Our leaders have been making comically bad decisions for decades, and thanks to them we now have a complete and utter nightmare on our hands.

Michael’s new book entitled “Why” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

The personal-finance website WalletHub on Friday released its new Credit Card Debt Study, which found that consumers added $21 billion in debt during the third quarter of 2024.

Early results for the fourth quarter of the year show preliminary data for October at a new record high for credit card debt in the month, in absolute terms.

WalletHub editor John Kiernan wrote, “Even though that third-quarter increase was 31% smaller than last year’s and total debt is just 3% above where it was last year after adjusting for inflation, we are still in fairly dangerous territory,” said Kiernan.

WalletHub writer & analyst Chip Lupo responded via email to follow up questions from The Center Square.

Those early Q4 results showing record high credit card debt for October are alarming-do we know what’s driving that at all?

“The record-high credit card debt in October 2024 reflects a 3% year-over-year increase after inflation adjustments, driven by rising interest rates, holiday spending and lingering economic pressures. While Q3 debt growth slowed compared to 2023, total debt remains high at $1.29 trillion, signaling potential challenges ahead for consumers,” said Lupo.

Has WalletHub done any analysis of how much credit card debt the average American puts on during the holidays?

“While we didn’t analyze this specifically, WalletHub found that holiday budgets this year range from just over $200 to more than $4,000, depending on factors such as income, existing debt, and cost of living,” said Lupo.

Any advice on balance transferring to avoid interest?

“Transferring your credit card balance to a low or 0% APR card can be a smart way to save money and pay down debt faster. When considering a balance transfer, focus on cards offering 0% introductory APRs with promotional periods up to 21 months. Such offers significantly reduce interest payments, provided you can pay off the transferred balance before the regular APR kicks in. Remember, most cards charge a balance transfer fee of about 3%, though some will waive this fee entirely. Calculating these costs upfront is crucial to ensure the move saves money,” said Lupo.

With holiday spending in full swing, many Americans are expected to add to credit card debt before the end of the year.

“Nearly half of Americans still have debt from the holidays from last year,” said Lupo. “The fact that people are still paying off debt from last holiday season makes you wonder if they are going to fall into that trap again or are they cutting back because of last year’s debt?”

Sixty-eight percent of WalletHub respondents said Santa will be less generous this year because of inflation. And about a third said they’ll spend less on holiday shopping this year compared with 2023.

Treasury International Capital (TIC) data published on Nov. 18 show foreign investors purchased $169 billion in U.S. government bonds in September, totaling a record $8.673 trillion.

Foreign investors bought a mix of short- and long-term bonds. Treasury bills—maturities between 30 days and 1 year—continue to appeal to bond investors, providing yields as high as 4.6 percent.

Japan and China, the two largest holders of U.S. debt, trimmed their holdings in September.

Tokyo erased about $6 billion, lowering its portfolio of Treasury securities to $1.123 trillion. Beijing reduced its holdings of U.S. government bonds by more than $2 billion to $772 billion.

While China has steadily decreased its exposure to Treasurys over the past several years, its holdings have changed little since September 2023.

Belgium ($41 billion), the United Kingdom ($21 billion), France ($16 billion), and Singapore ($9 billion) were the leading buyers, TIC figures show.

Hong Kong was the only other foreign market to register a nearly $3 billion decline.

The trend of foreign investment into U.S. Treasury securities has been unsurprising, given their vast demand at auctions over the last several months.

During the $42 billion auction of 10-year bonds on Nov. 5, indirect bidders—commonly foreign entities—purchased 62 percent of the supply. Direct bidders—domestic investors—bought less than a quarter of the issued bonds.

Foreign investors also acquired nearly two-thirds of the supply of 30-year bonds at the $25 billion auction on Nov. 6.

The yields in the United States bond market are some of the highest in the world. The U.S. Treasury market is also one of the largest and most liquid corners of international financial markets. Investors are hungry for yields with central banks unwinding their restrictive policy stances and launching a new easing cycle by cutting interest rates.

Despite the Federal Reserve following through on its rate-cut endeavors, Treasury securities have remained elevated. The benchmark 10-year Treasury yield, for example, has climbed nearly 80 basis points since the Fed lowered the federal funds rate for the first time in more than four years in September. As of Nov. 19, the 10-year bond is hovering at about 4.4 percent.

Treasury yield increases have also helped support the U.S. dollar.

The U.S. Dollar Index (DXY), a gauge of the greenback against a weighted basket of currencies, has surged nearly 2 percent over the past month, lifting its year-to-date gain to close to 5 percent. It also rallied to a one-year high of above 107.00 on Nov. 14.

The international reserve currency has rocketed on the futures market recently, shifting Fed policy expectations, with investors penciling only three quarter-point rate cuts by the end of next year, according to the CME FedWatch Tool.

“The potential for fewer cuts from the Fed and a more dovish ECB [European Central Bank] has been a big factor behind the dollar’s advance over the last few months,” said Adam Turnquist, the chief technical strategist at LPL Financial, in a note emailed to The Epoch Times.

Charles Seville, the senior director at Fitch Economics, believes the ECB will reduce interest rates faster amid weakening economic data.

“Although unemployment has yet to rise, labour markets are cooling and wage pressures subsiding,” Seville said in a research note last month.

“Past monetary tightening is clearly still affecting the economy. The ECB appears concerned that eurozone economic growth will undershoot its September forecasts, putting more downside pressure on inflation when it’s already close to target.”

The rate-setting Federal Open Market Committee will hold its next two-day policy meeting on Dec. 17 and 18.

The U.S. dollar’s future direction will also depend on Wall Street’s confidence that President-elect Donald Trump will extend the expiring Tax Cuts and Jobs Act and enact his sweeping tariff plans.

While a strengthening dollar benefits consumers and importers, it can also harm domestic companies that export their goods and services to foreign markets. The president-elect and his team have previously questioned the long-standing strong-dollar policy as they try to resurrect U.S. manufacturing.

“We have a big currency problem,” Trump told Bloomberg Businessweek this past summer, calling it a “tremendous burden” on U.S. businesses.

“Nobody wants to buy our product because it’s too expensive.”

However, Trump also pledged to protect the dollar hegemony and its chief reserve currency status, telling an audience of business leaders at the Economic Club of Chicago in October that the country could transition to “third-world status” if it the king dollar were dethroned.