To start the year, the U.S. government didn’t bother with a hangover, rather it continues to spend so profligately that if we compared it to a drunken sailor, we’d have to apologize to the sailor.
Closing out 2025, America managed to rack up over $38 trillion in “official” debt. Looking at debt relative to GDP, it’s back over 121%:
U.S. debt-to-GDP is back above 121% (Source: FRED)
Magically, too, government spending adds to the nation’s GDP rather than “crowding out” from the private sector.
Our PSA to start the year: Countries with debt-to-GDP ratios over 120% tend to be susceptible to a crisis that results in austerity measures, capping future GDP growth.
Historically only countries with high personal savings rates can avoid crises at these levels.
Alas, we can expect even more profligacy in 2026 as President Trump pushes his global realignment agenda and hands out incentives — like tariff rebates — to voters ahead of the midterms.
~ Addison
P.S. Grey Swan Live! returns from its holiday hiatus this week. Our guest this week will be Matt Smith, publisher at Casey Research. Matt and co-author Doug Casey have just released a new book titled “The Preparation.” Stay tuned, details to come…
Members can access the 2026: Something Wicked This Way Comes episode of Grey Swan Live! with Dan Amoss replay in the members-only archive of the Grey Swan Investment Fraternity site here.
