$37 Trillion (and Counting): How Government Debt Affects Your Wallet

The U.S. national debt has surged past $37 trillion – years sooner than expected. That’s over $108k per American, and it’s not just numbers on a screen! Here’s how the national debt affects your financial future every single day…

Last month alone, Washington overspent by $850 for every man, woman, and child in America.

The deficit for June totalled $291 billion. And please note this is not an annual number – that’s in just one single month.

It makes me think of a line attributed to Congressman Everett Dirksen: “A billion here, a billion there, and pretty soon you’re talking about real money.” Now, Dirksen died in 1969 after 34 years in Congress – proof that reckless overspending isn’t new.

What’s modern is the staggering scale.

The milestone no one wanted to reach

The July $291 billion deficit pushed total U.S. debt past $37 trillion. This is especially shocking considering that July was also the month when tariff revenue set a new record of $27.7 billion. We may think the Department of External Revenue is a great idea – but the math isn’t working.

Now, we all knew this was coming. Back in 2020, the Congressional Budget Office (CBO) forecast a debt rise to $37 trillion – but not by 2030.

Think about that: in just five years, the national debt broke a 10-year forecast.

Today, that works out to more than $108,000 owed per American.

Now, we’re not going to get a bill in the mail for our share of the national debt. But that doesn’t mean the debt explosion is without consequences…

From Washington to your wallet

It’s one thing to read about trillions in debt. It’s another to feel it at the grocery store, in your utility bill, or when you shop for a car.

The connection isn’t obvious, but it is a real economic force. Massive government borrowing swells the money supply, which drives up prices. The effects ripple across the economy:

Higher borrowing costs – Mortgage rates climb, car loans get pricier and credit generally gets more expensive, stifling both consumption and business investment
Rising prices – Across the board, everything from homes and food to gasoline and appliances cost more
Slower growth – Private investment competes with government spending, which effectively “crowds out” many entrepreneurial activities

I want you to understand that these are not abstractions. They’re real effects on the national economy.

Let’s take just one example of how government spending affects a slice of the “real economy.” Edd Hamzanlui, who works with builders and construction companies, gives six specific ways rising national debt affects his industry:

Higher mortgage rates and more expensive credit
Inflationary pressures push up prices on materials (lumber, fuel etc.)
Reduced infrastructure investment
Crowding out of private funds: “When government borrowing absorbs more available capital, less is left for private borrowers. Historically… risk premiums rise, lenders become more selective, and credit creation slows sharply.”
Regional variations in impact: “Not all markets will be affected equally. The debt stress is uneven, and vulnerabilities concentrate where debt burdens are highest relative to income.”
Debt cycles: In other words, government spending fuels boom and bust cycles in real estate.

You can sum up the impact of all of those effects of excessive government spending by saying, “Real estate costs more.” But that’s a gross oversimplification.

In housing, these forces combine to make real estate more expensive while financing becomes harder to get.

And a similar pattern plays out in every sector of the economy…

The inflation multiplier you didn’t vote for

Government spending isn’t the only force driving prices higher.

Our banking system, built on fractional reserve lending, magnifies the effect. When a bank lends out our deposits, those dollars still count as “money” in circulation – multiplying the amount of credit available for spending, without creating value.

This is a complicated topic, and I don’t want to dive too deeply into it – suffice to say, it’s more than just the federal government driving prices higher.

We’re living in an economic system that chips away at our purchasing power steadily, day after day, year after year.

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