My hottest US debt take:

First, a massive portion of US debt ($33 trillion of it!!!) is ultimately held by US financial system itself including the Fed, banks, funds, pensions, insurance companies, households and government accounts.

Another ~$9 trillion is held by foreign investors.

So yes, $33 trillion of US debt is essentially just owed back to ourselves.

The United States doesn’t need to “pay off” $40 trillion by some arbitrary date because some country is demanding it.

Owing money back to yourself is the best kind of loan. You would never just default on yourself. You keep building, growing, betting on yourself and pay it back.

My favorite concept is that technically at this point the US only needs to show a $1 surplus and they have 40 trillion years to pay it off.

I also find it amusing that no one ever talks about the full Balance sheet including the assets. For example: Just 5 US companies alone are about $10 trillion in market cap. What’s everything else worth? Land? Gold?

Your brain can’t even comprehend how massive the asset side is. The price to book value is as low as ever at this point in time. Ben Graham is drooling somewhere.

And here’s another weird thing people forget and never bring up:

The Federal Reserve itself owns roughly $4.5 trillion of Treasuries. When the Fed earns excess profits, after its expenses, dividends and required surplus, those earnings ultimately get remitted back to the Treasury as profit.

So when people post:

“THE US HAS $40 TRILLION OF DEBT!!! ITS OVER”

It’s just great day trading fodder to counter from people who don’t actually look into the composition of the numbers.

So if you’re going to borrow trillions, the real question isn’t simply “How much did we borrow?”

It’s:

“What did we build with it? And who borrowed it?”

Loan sharks? You’re screwed.

Oh you loaned it to yourself? Smart.

Even better: You loaned it to yourself to make Infrastructure. Energy. Chips. AI. Defense. Research. Manufacturing. Education. Productivity.

Borrowing $1 trillion that ultimately creates several trillion dollars of additional productive capacity is a completely different equation than borrowing a trillion to light it on fire.

That’s also why today’s environment fascinates me.

Rates are high. Debt headlines are everywhere. Everyone is staring at the liability side of America’s balance sheet.

But literally no one looks at the entire composition of what it’s made of and what it’s building.

The asset side is as incredible as it’s ever been and I haven’t even mentioned the military asset.

And now the Treasury is ramping up buybacks!?

Ladies and gentlemen…. start your engines