Simon Rorschach traces how America’s mountain of debt has created an adversary Trump cannot threaten, bomb, or tariff into submission.
The American state has reached a point Karl Marx would have understood at once: the government commands armies, levies taxes, prints the world’s chief reserve currency, and still depends upon men who decide whether to lend it money. Federal debt has now passed $40 trillion for the first time, equal to roughly 126 percent of annual economic output and close to the ratio reached during the Second World War. Washington runs an annual deficit of about 7.5 percent of the GDP. Interest charges alone exceed $1 trillion a year, a sum larger than the military budget. Debt service has become the second-largest claim on a federal budget of roughly $7 trillion, behind only Social Security and Medicare. Marx wrote that public debt turns future state revenue into a present financial asset. America has carried that process further than any previous great power.
What happens when America’s creditors begin demanding a higher price for financing its power?
