Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
Add SBC on Google as a preferred source to see more market related news like this when you search.
America’s national debt has officially crossed $40 trillion, less than five months after reaching $39 trillion. Yet, the speed of that climb is only part of the problem.
Treasury yields are near their highest levels since 2007, interest costs are surging, and roughly one-third of marketable U.S. debt is set to mature within the next 12 months. The $40 trillion milestone may be symbolic, but the financial pressure building behind it is increasingly difficult to ignore.
From $1 Trillion to $40 Trillion in 45 Years
On August 18, the U.S. Department of the Treasury reported that the national debt had reached $40,047,425,768,420.22. As the Committee for a Responsible Federal Budget (CRFB) points out, this figure has doubled in the past decade and quadrupled in the last 20 years.
More strikingly, the U.S. didn’t cross the $1 trillion threshold until 1981, meaning the national debt grew 40-fold in about 45 years. The history of U.S. debt reveals a troubling pattern in which new debt milestones have arrived at an increasingly rapid pace, and the U.S. is far from alone in this trend — see how it stacks up against other heavily indebted nations.
What Makes Up the $40 Trillion?
The national debt is often displayed as a single figure, but it’s not all held by the same entities. Broadly, U.S. debt is either held by the public or held within the federal government itself.
According to the Treasury Department, about $32.26 trillion is held by the public, while the remaining $7.78 trillion is intragovernmental debt, primarily securities held by federal trust funds and other government accounts.
Notably, that roughly 80-20 split isn’t constant. At the $30 trillion milestone in 2022, about 78.3% of gross federal debt was publicly held, compared with roughly 80.6% today, meaning the publicly held portion has grown faster than intragovernmental debt.
This distinction matters because publicly held debt must be financed through investors and capital markets, making the cost of new and refinanced borrowing sensitive to interest rates and investor demand.
The Bigger Problem Behind the $40 Trillion Headline
The $40 trillion national debt is an alarming figure, but the round-number milestone itself is largely symbolic. The real concern is how quickly the debt is growing, where it is headed, and how large that burden has become relative to the U.S. economy.
Debt-to-GDP Ratio
The raw size of the national debt matters less than how it compares with the economy supporting it. Recently, debt held by the public has reached 100% of GDP, meaning federal obligations roughly equal a full year of U.S. economic output.
Under current law, that ratio is projected to climb to 120% by 2036, surpassing the post-World War II record and signaling that debt is growing faster than the economy.
Federal Deficits
Federal deficits are the building blocks of the national debt. When Washington spends more than it collects, which it has every year since 2001, the debt burden increases. Recently, the CBO raised its projected FY2026 federal deficit from $1.9 trillion to $2.1 trillion.
Although Washington’s annual budget deficit continues to grow in raw dollar terms, the gap is also widening relative to the size of the economy. Current projections place the federal deficit at 5.8% of GDP in FY2026, rising to 6.7% by 2036.
Debt Interest Costs
The clearest sign of mounting fiscal pressure is the rapidly accelerating cost of servicing the debt. For FY 2026, net interest is expected to reach about $1 trillion, or 3.3% of GDP. However, this figure is likely to more than double to $2.1 trillion, or 4.6% of GDP by 2036.
Those payments consume federal revenue without funding new programs, while higher rates make newly issued and refinanced debt increasingly expensive. As a result, interest costs can push deficits higher even if the government’s underlying fiscal balance improves — and left unchecked, that dynamic can quietly erode the purchasing power of savers over time.
Rising Treasury Yields Make the Debt More Expensive
As the U.S. debt approached this milestone, long-term Treasury yields began climbing to multi-decade highs. The 10-year yield now hovers around 4.6%, while the 30-year yield sits near 5.3%, putting both near their highest levels since 2007.
Long-term Treasury yields offer an important window into borrowing conditions because they reflect the returns investors demand to lock up their money in U.S. government debt for years or decades. Right now, investors are demanding more than they have in nearly 20 years.
Of course, those higher yields do not immediately apply to the entire $40 trillion debt balance. Existing securities keep their original rates until they mature. The pressure builds when the government rolls over maturing debt and issues new securities at prevailing market rates.
According to the Treasury, 33% of marketable debt will mature within one year and 54% within three years, meaning a large share of America’s debt could soon be refinanced at today’s higher rates, pushing interest costs even higher and putting more pressure on the federal budget.
What This Means For Your Portfolio
Milestones like $40 trillion are attention-grabbing, but the underlying trend — rising deficits, climbing borrowing costs, and a debt load outpacing economic growth — is what really matters for household finances. As Washington’s interest bill balloons and Treasury yields stay elevated, more investors are looking to diversify beyond cash and Treasurys. If you’re wondering how much of your own portfolio should be allocated to hard assets, our guide on how much gold should be in your portfolio breaks down the numbers.