U.S. Treasury · U.S. · Fortune Technology
U.S. debt is a looming crisis today but was once its own revolutionary masterstroke that helped launch a global financial
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Believe it or not, U.S. debt was once a source of national strength, before it became a sword of Damocles hanging over the federal government and the bond market.
Key facts
- The Treasury market also remains the world’s deepest and most liquid, with over $30 trillion in outstanding securities and more than $1 trillion in daily trading volume
- The debt-to-GDP ratio is about 100% today, and forecasts from the Congressional Budget Office see it hitting 175% by 2056—suggesting 210% is decades away on its current trajectory
- The U.S. has 25 more years in a lower-growth scenario, 22 years with medium growth, and 19 years with higher growth, PWBM estimated
- Under the historical growth rate of healthcare costs, there is a 25% chance of hitting the debt maximum in 14 years,” it added
Summary
While the nation celebrates the 250th anniversary of the Declaration of Independence, the origin of U.S. financial might can be traced back to a controversial decision in 1790 to consolidate debts from the Revolutionary War. Alexander Hamilton, who served as the first Treasury Secretary, is considered the architect of American finance as he engineered one of the most consequential economic decisions in early U.S. history. He recognized how debt can unlock resources that could transform the young republic. To fight off the British Empire, the Continental Congress borrowed heavily domestically and internationally via various instruments, while individual states racked up their own war debts.