How Would a Debt Spiral Occur in America Leading to Collapse

 USA is using its credit card now to the tune of $1 trillion every 100 days.  Even a 5th grader knows this can’t continue.  And yet Democrats are standing in the way of DOGE trying to cut waste and reduce the deficit.  We find it interesting that this article says the year 2034 our debt will be unsustainable.  If you look on your Social Security statement you will see it says, “at current rates, social security will not be able to pay 100% of promises in 2034.”  Social Security currently takes in more money than it spends and has since the beginning of the program in 1935.  But the SS Trust fund doesn’t have the money invested in farm land, gold or Microsoft stock…they used all that money to buy government bonds.  It really does start to feel like the whole thing is a Ponzi scheme.  We just hope it lasts until Jesus returns for His bride.

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Let’s break this down step-by-step.

Understanding the Current Debt Trajectory

The U.S. national debt is currently $37 trillion, and it’s growing at a rate of $1 trillion every 100 days. This translates to an annual increase of approximately $3.65 trillion (since there are about 365 days in a year, and $1 trillion every 100 days equals 3.65 increments per year). If this pace continues unchecked, the debt could reach insane levels:

In 5 years: $37 trillion + (5 × $3.65 trillion) = $55.25 trillion
In 10 years: $37 trillion + (10 × $3.65 trillion) = $73.5 trillion
In 20 years: $37 trillion + (20 × $3.65 trillion) = $110 trillion

Adding $330 billion per year on an scaled up Ukraine war for say 3 years would add another trillion to the debt. This would make the 5 year debt $56.35 trillion. If interests rates were the same as 2024 then the annual interest would be $1.06 trillion per year in 2030 and $2 trillion per year in 2045.

The pace of debt growth can also accelerate. The interest payments would be growing which would make it harder and harder to stop deficits from growing. A $55 trillion debt would be increasing debt growth by another 400 billion per year from interest.

As is often said, going bankrupt happens slowly and then suddenly.

The USSR’s collapse in 1991 was driven by economic mismanagement, political instability, and external pressures, which differ from the U.S.’s current context. The U.S. benefits from its ability to print its own currency and the dollar’s status as the world’s reserve currency, giving it more flexibility than the USSR had.

When Could a Collapse Happen?

A “collapse” like the USSR’s implies a complete breakdown of the economic and political system. While the U.S. debt is a serious concern, a sudden collapse is unlikely in the near term due to mechanisms like domestic debt ownership (much of the debt is held by U.S. entities) and the Federal Reserve’s ability to manage monetary policy. However, if the debt continues to grow at $1 trillion every 100 days without fiscal adjustments or significant economic growth, it would become unsustainable.

The U.S. debt-to-GDP ratio is currently over 120%, a level that historically signals risk for some nations. If this ratio keeps rising—say, to 150% or 200%—the burden of debt servicing could overwhelm the economy. At the current rate, and assuming GDP growth doesn’t keep pace, this could happen within 10 to 20 years (roughly 2034–2044). 

Some analysts think a crisis could hit as early as 5 years (around 2029) if trends worsen, but this is not a consensus view. A more gradual decline or crisis is more likely than a sudden USSR-style collapse.

Hyperinflation and an Upward Interest Rate/Inflation Spiral

Hyperinflation occurs when confidence in a currency collapses, often due to excessive money printing to pay off debts, leading to rapidly rising prices. The U.S. has increased its money supply in recent years (e.g., during the COVID-19 pandemic), but hyperinflation hasn’t occurred … yet, thanks to the Federal Reserve’s inflation controls. 

However, if debt growth forces more money printing, confidence could erode.

An upward spiral in interest rates and inflation could start if the Federal Reserve raises rates to combat inflation, increasing the cost of paying the interest on the debt. The US paid $680 billion in interest last year. This is projected to hit $1.2 trillion by 2032 per the Congressional Budget Office). Higher debt costs could then require more borrowing or printing, fueling further inflation. This cycle could emerge if debt becomes unmanageable—potentially within 10 years (by 2034) if current trends persist and no corrective action is taken. Hyperinflation might follow shortly after if confidence in the dollar plummets, though this could only be delayed by policy interventions.

Loss of Reserve Currency Status
The U.S. dollar’s role as the world’s reserve currency depends on global trust in the U.S. economy. If the debt crisis erodes this trust, alternatives like Bitcoin, the Euro, or the Yuan could gain ground. Here’s how they stack up:

Bitcoin: Seen as a decentralized alternative with a fixed supply, Bitcoin could grow as a hedge against inflation. However, its volatility and limited use in everyday transactions make it unlikely to replace the dollar soon. It might take 20 years but more crypto might happen sooner. There are other crypto coins.

https://www.nextbigfuture.com/2025/02/a-debt-spiral-and-us-financial-collapse-in-the-2030s.html