How the US is Quietly Erasing The $39 Trillion National Debt

 See: https://www.youtube.com/watch?v=rRumSzwsaRw

THREE WAYS OUT When a government has this much debt, there are only three realistic paths: austerity, default, or inflation. Austerity means tax hikes and spending cuts, but that is politically almost impossible because it would require painful cuts to programs like Social Security, Medicare, and defense. Default would be catastrophic because U.S. Treasuries are the foundation of the global financial system. That leaves the third option: slowly shrinking the debt through inflation. INFLATION SOLUTION If the government pays 2.5% interest while inflation runs at 6%, the real value of the debt shrinks by 3.5% per year. The debt technically remains, but its burden becomes smaller. This is how governments can quietly reduce debt without officially defaulting or admitting that savers are absorbing the cost. FINANCIAL REPRESSION The U.S. used this playbook after World II. Debt reached roughly 106% of GDP, and instead of paying it down through responsible budgeting, the government kept interest rates artificially low while inflation ran higher. Treasury bills were pegged at 0.375%, long-term bonds at 2.5%, and inflation at times reached double digits. Savers and bondholders earned negative real returns, while the national debt was inflated away over time.

I have blogged about this before, see: https://aftermath2022.blogspot.com/2026/04/financial-repression.html

So, we should expect more inflation.

Now, look at Graham Stephan's links, copied from a link off his video.

CLAIM: SOURCE:

USA Debt-To-GDP https://www.visualcapitalist.com/wp-content/uploads/2021/06/US_Debt_to_GDP_Shareable.jpg

America's Path To $38T National Debt https://finance.yahoo.com/news/america-path-38-trillion-national-140000583.html

National Debt Surpasses WW2 Peak https://fortune.com/2026/05/08/america-national-debt-surpass-ww2-peak-washington-budget-cuts-tax-rich-deficit/

National Debt Will Hit $50T By 2030 https://www.forbes.com/sites/eriksherman/2026/01/26/at-current-rates-the-national-debt-will-hit-486-trillion-by-2030/

Government Interest Cost Over Time https://www.cato.org/sites/cato.org/files/styles/pubs_2x/public/2023-03/interest%20costs.png?itok=-pkpZSIS

The Debt Spiral - Explained https://www.crfb.org/blogs/cbo-projects-possible-debt-spiral-r-exceeds-g

The Federal Reserve Rate Cut Plan https://www.usatoday.com/story/money/2025/07/03/trump-fed-rate-cuts-us-debt/84440487007/

 Government Interest Exceeds National Defense https://fortune.com/2026/04/29/39-trillion-national-debt-defense-spending-donald-trump/

 Policy Budgets Over Time https://www.cato.org/research-briefs-economic-policy/look-back-ahead-federal-budget

Plan To Cut $1T Spending In Big Beautiful Bill https://www.foxnews.com/politics/gop-unveils-plan-cut-deficit-1-trillion-second-big-beautiful-bill

Financial Repression https://en.wikipedia.org/wiki/Financial_repression

USA Debt-To-GDP Adjusted For Spending https://thedailyeconomy.org/wp-content/uploads/2026/05/image-2.png

Inflation Rates Throughout The 1940s https://www.lynalden.com/wp-content/uploads/policy-1940s-inflation-rates.png

How The USA Saved The National Debt https://www.imf.org/-/media/files/publications/wp/2024/english/wpiea2024005-print-pdf.pdf

Kevin Warsh Joins Federal Reserve https://www.barrons.com/articles/kevin-warsh-federal-reserve-plan-f3da1a02

Kevin Warsh Appointed Chair of Federal Reserve https://www.theguardian.com/business/2026/may/11/senate-kevin-warsh-federal-reserve-chair

Federal Policy Changes Over Time https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm

Inflation - Substitution Bias https://www.nber.org/papers/w33665

Hedonic Adjustments To Inflation https://www.bls.gov/cpi/quality-adjustment/questions-and-answers.htm