How the U.S. Could Go Broke (And Why It Matters to You)

05-09-2025 | Author: Ben Griffin

I know what you might be thinking:

“The U.S. can’t really go broke. We’re the richest country in the world. We print the money. We’ve always bounced back.”

That belief is widely held—and understandable. For most of our lifetimes, the United States has been a global economic powerhouse. But even the strongest empires stumble when they ignore warning signs. And right now, we’re ignoring a big one.

(Ray Dalio speaks to this in his book The Changing World Order—reminding us that no currency, not even the U.S. dollar, holds its reserve status forever. History teaches that dominance fades when nations become fiscally undisciplined.)

In this article, I want to explore how a country like the U.S. could, in practical terms, go broke—and why this isn’t just a theoretical debate for economists. It affects you, me, our families, our businesses, and our future.


What Does “Going Broke” Actually Mean?

Let’s be clear: “going broke” doesn’t mean the government shuts down overnight or the lights go out. It’s not sudden. And it doesn’t mean we default like a bankrupt company.

Here’s what “going broke” looks like in slow motion:

  • Interest payments devour a growing share of the federal budget.
  • Investors demand higher interest rates on U.S. Treasury bonds due to declining confidence.
  • The Fed is pressured to print more money, feeding inflation.
  • The dollar begins losing credibility on the global stage.
  • The government is forced to cut essential services or raise taxes—usually during tough economic times.

In plain terms, it means we lose flexibility, control, and trust—both at home and abroad.

A Simple Analogy: Your Family Budget

Imagine if your household spent more every year than it earned. You start putting everything on credit cards—your mortgage, your groceries, even your medical bills. Because you’ve always paid your bills, lenders keep extending your credit.

But over time, two things happen:

  1. Interest payments start eating your paycheck.
  2. Lenders get nervous, raise your rates—or stop lending altogether.

You haven’t run out of money yet. But you’ve lost your ability to make meaningful choices. You’re broke in all the ways that matter.

That’s the road we’re on as a nation.

The Debt Is Already Unsustainable

Right now, the U.S. national debt is over $34 trillion—about 120% of our GDP. That means we owe more than we produce in a year.

According to Dalio and other economic historians, once a nation passes 130–150% debt-to-GDP and continues running large deficits, the clock starts ticking. Not in hours—but in years.

At our current pace (with deficits between 6–8% of GDP), we’re on track to hit 200% debt-to-GDP within 16 to 18 years. It could be sooner if growth slows or interest rates stay high.

Sixteen years may sound like a long time—but it’s just four national election cycles.

And historically, no country has maintained debt at that level without experiencing:

  • Currency collapse
  • Hyperinflation
  • Civil unrest
  • Or outside intervention

But Don’t We Just “Owe It to Ourselves”?

That’s a common argument. And it’s partially true: much of our debt is held domestically—by the Social Security Trust Fund, pension plans, and the Federal Reserve.

But a substantial share is also held by foreign creditors like China and Japan. And when they lose confidence—or choose not to reinvest—the ripple effects are severe:

  • Confidence in U.S. debt erodes.
  • The dollar weakens.
  • The cost of borrowing skyrockets.

This isn’t hypothetical. We’ve seen it in Argentina, the U.K. in the 1970s—even in ancient Rome.

It’s Not About Left or Right. It’s About Math.

Both parties have contributed to the debt spiral:

  • One expands programs with no plan to fund them.
  • The other cuts taxes without controlling spending.

And neither party wants to have the hard conversations—about entitlements, defense spending, or rationalizing the tax code.

This isn’t about red or blue. It’s not liberal vs. conservative.

It’s about basic arithmetic—and long-term responsibility.

Yet while our elected officials argue and grandstand, the national debt continues to climb—and very few have shown the backbone to act.

Why This Matters to You and Me

You may not feel it yet. But the consequences are coming. Slowly at first—then suddenly:

  • Higher taxes on your income, property, or business
  • Reduced Social Security and Medicare benefits
  • Persistent inflation that quietly erodes your savings
  • More political instability and rising distrust in government

The real danger isn’t just economic collapse. It’s the erosion of public confidence and national unity. Once people stop believing the system can be sustained, the system starts to unravel.

So What Do We Do?

That’s what I’ll explore in the next article. There’s still time to act—but the longer we wait, the harder and more painful it becomes.

Ray Dalio proposes what he calls the “3% solution”—a realistic, achievable fiscal target to stabilize the debt and avoid the most dangerous outcomes.

We’ll dig into that next.

In the meantime, I ask you to:

  • Keep reading,
  • Keep thinking,
  • Keep asking the questions our leaders refuse to,
  • And speak up when you have the chance.

Because going broke isn’t about crossing a single threshold.

It’s about losing our options.
And we’re too smart, too capable, and too resourceful a nation to let that happen on our watch.

Ben Griffin
Author: Ben Griffin

Facilitator - CEO Peer Advisory Group; Executive Coach; Photographer