Guest Post by Peter Reagan
There’s a special satisfaction that comes with paying off your mortgage, isn’t there?
For most Americans, it’s one of the biggest financial milestones of their lives. No more monthly house payments. No more worrying about mortgage interest rates. The house is finally yours, free and clear.
Maybe you’ve paid off your vehicles, too. And maybe you pay your credit card balance in full every month.
Congratulations! You’ve achieved a degree of financial independence that a lot of Americans spend their entire lives working toward.
But here’s something you may not have considered…
You can pay off every dollar of your own debt and still suffer the consequences of somebody else’s borrowing.
Especially when that somebody happens to be the federal government.
See, Washington doesn’t borrow from some separate financial universe. It competes for financing in the same economy as the rest of us.
And when Washington borrows money on the scale we’re talking about today, the consequences can reach much further than most Americans realize.
Even those who don’t owe anybody a dime.
According to an October 17 report from Fortune, the federal government spent a staggering $1.05 trillion on net interest payments during the fiscal year 2026.
That’s approximately $2.9 billion every single day.
Now, I want to make an important distinction here.
That $2.9 billion a day isn’t how much Washington is borrowing. It’s how much Washington is paying in interest on money it has already borrowed. And already spent (or wasted, or lost).
Those interest payments are up over 8% from last year.
To put those numbers in perspective, interest on the federal debt is now the third-largest category of federal spending, behind Social Security and Medicare.
Interest payments consumed 14% of the entire federal budget in fiscal 2026.
Think about that for a moment. More than one dollar out of every seven spent by the federal government went toward servicing its existing debt.
Not building roads. Not maintaining bridges. Not providing medical care or Social Security payments. Not building Tomahawk missiles or paying disabled veterans’ benefits.
Just paying interest.
And according to the Peter G. Peterson Foundation’s estimate cited by Fortune, those interest costs reached consume the largest share GDP ever – surpassing the previous record set in 1991.
Of course, governments borrow money all the time. Sometimes for very good reasons, such as financing infrastructure or responding to emergencies.
Borrowing itself isn’t necessarily the problem.
The problem is what happens when enormous, persistent deficits require enormous, persistent borrowing – year after year after year.
And here’s where the consequences become personal.
Let’s talk about something economists call crowding out.
The underlying idea is fairly straightforward: There’s a finite supply of savings and capital available at any given time, and borrowers compete to attract it.
That includes individuals financing homes and vehicles, businesses borrowing to expand, and governments borrowing to finance their spending.
Now, it isn’t literally one enormous bank account that everybody draws from. Banks create credit, foreign investors supply capital, and the Federal Reserve influences borrowing conditions.
But there is a connection between government borrowing and private borrowing. And it’s an important one.
The Congressional Budget Office explains that greater federal borrowing can increase interest rates, reducing private investment as the government competes with businesses for available financing.
In everyday terms, here’s how the process works:
When the government borrows more, it increases demand for financing. That additional demand can exert upward pressure on interest rates. Higher rates, in turn, make borrowing more expensive for businesses and households.
Now, federal borrowing isn’t the only influence on interest rates. Inflation, Federal Reserve policy, economic growth and international demand for U.S. debt all matter, too.
But the relationship is real.
And consider what happens when borrowing becomes more expensive.
A young family that could afford a mortgage at 5% might find that same house unaffordable at 7%.
A business owner who planned to borrow money for new equipment might discover that the additional interest expense makes the expansion unprofitable.
A manufacturer might postpone building another facility. A small business might delay hiring additional workers.
Those are very real economic consequences.
But you might be thinking, “Peter, none of those examples applies to me. I don’t need a mortgage or a business loan.”
Fair enough.
Unfortunately, that doesn’t mean you’re insulated.
Let’s go back to that mortgage-free homeowner I mentioned earlier.
Imagine you’re approaching retirement. You’ve paid off your house, and you’re thinking about selling it, downsizing and moving closer to your grandchildren.
You’re not planning to borrow any money. But what about the person who wants to buy your house?
Chances are, that person needs a mortgage.
If higher borrowing costs have reduced the number of buyers who can afford your home, you may have to wait longer to sell or accept a lower price than you expected.
Even though you don’t owe a penny, the availability and cost of credit can still affect one of your family’s most valuable assets.
And that’s only one example.
Consider the business where you work. Maybe you’ve been there for 25 years, you earn a good salary, and you’re counting on a few more years of raises before retirement.
But what happens if your employer can’t justify borrowing the money needed to expand?
Maybe the company postpones an expansion. Maybe it holds off on hiring. Maybe annual raises become smaller because revenue isn’t growing as quickly as expected.
Your personal finances might be in excellent shape. But your employer operates in an economy where the cost of credit matters.
There’s another, less obvious consequence, too.
When businesses can’t afford to invest in better equipment and more efficient production, their costs can remain higher than they otherwise would be.
Those costs can eventually show up in the prices customers pay.
Don’t take my word for it, either. The Government Accountability Office specifically identifies higher borrowing costs, slower wage growth and more expensive goods and services as potential consequences of mounting federal debt.
In other words, you don’t have to borrow money yourself to be affected by rising borrowing costs.
And we haven’t even discussed the consequences for taxpayers yet.
Here’s where the situation gets especially uncomfortable.
As Washington accumulates more debt, its interest expenses grow. And when existing government debt comes due, refinancing it at higher interest rates can make those expenses grow even faster.
Meanwhile, persistent inflation complicates the Federal Reserve’s job.
In September, the Fed raised its benchmark interest rate by a quarter of a percentage point, bringing its target range to 3.75%–4.00%.
And according to Investopedia, Fed officials have expressed serious concerns about stubborn inflation and debated whether additional interest rate increases will be necessary.
Here’s the dilemma:
Higher interest rates can help restrain inflation, but they also raise borrowing costs throughout the economy. And as federal debt matures and must be refinanced, those higher rates can gradually increase Washington’s interest expenses.
That leaves the government facing some difficult choices.
They can attempt to reduce spending, increase tax revenue, or continue borrowing to cover the gap.
None of those options comes without consequences.
Cuts to government spending can affect public services and programs Americans depend on. Higher taxes can leave households and businesses with less money available for their own priorities.
And continuing to borrow can compound the problem.
Now, I don’t want to suggest that this automatically leads to some inevitable financial catastrophe. Stronger economic growth, changes in fiscal policy and lower interest rates can all influence the outcome.
But growth alone may not be enough.
The Congressional Budget Office projects that federal debt will continue rising substantially relative to the size of the economy over the next decade under current law. And the GAO has described the nation’s long-term fiscal path as unsustainable.
That’s not exactly reassuring.
What concerns me most is that Washington’s interest bill doesn’t exist in isolation. It influences the choices available to policymakers, businesses and families throughout the economy.
And those consequences can accumulate for years before most people recognize what’s happening.
I don’t know exactly how Washington will address its borrowing problem.
Will Congress eventually get serious about spending? Will policymakers raise taxes? Will stronger economic growth give the government some breathing room?
I certainly hope our elected representatives can find a responsible path forward.
But here’s what I do know: You don’t have to wait for Washington to get its financial house in order before making decisions about your own savings.
For me, one of the most compelling reasons to consider physical precious metals is that they represent a different kind of financial ownership.
Physical gold, for example, isn’t somebody else’s promise to repay a debt. Its value doesn’t depend on the creditworthiness of the federal government or a private borrower.
That’s an important distinction in an economy increasingly dependent on borrowing.
And it’s one reason gold has such a long history as a store of value.
If you’re interested in learning more about what makes physical gold different from other forms of savings, I’ve explored those characteristics in greater detail here: Why Physical Gold?
Now, that doesn’t mean gold is immune to economic conditions. Its price fluctuates, it doesn’t generate income, and there’s no guarantee it will rise in value whenever inflation or government borrowing increases.
But diversification isn’t about finding one perfect asset.
It’s about recognizing that different forms of savings carry different risks – and considering whether concentrating everything in one part of the financial system makes sense for your long-term goals.
A Precious Metals IRA is the only way I know of to own physical precious metals within a tax-advantaged retirement account.
Remember that paid-off mortgage we started with?
You’ve worked hard to get your financial affairs in order. Maybe you’ve spent decades making careful decisions so you can enjoy a comfortable retirement without the burden of debt.
That’s an accomplishment worth celebrating.
But unfortunately, being debt-free doesn’t mean being free from the economic consequences of debt.
Especially when Washington’s borrowing continues to grow.
The dollar buys less today than it did a year ago, a decade ago, a generation ago. That slide is the predictable result of endless printing and borrowing. Dr. Ron Paul believes the FED has the answer. But they’re keeping it to themselves. Fortunately, a new financial chart has publicly exposed their secret moves. See it for yourself: https://freekit.birchgold.com/lf/ro...D_v02a_article&placement=article&cid=rp_media
To learn more about how physical gold could help protect your retirement portfolio, click here to get your FREE info kit on Gold IRAs from Birch Gold Group. And now introducing a Crypto IRA to capitalize on the fastest growing market in the world.
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Continue reading...
[ H/T The Burning Platform ]
There’s a special satisfaction that comes with paying off your mortgage, isn’t there?
For most Americans, it’s one of the biggest financial milestones of their lives. No more monthly house payments. No more worrying about mortgage interest rates. The house is finally yours, free and clear.
Maybe you’ve paid off your vehicles, too. And maybe you pay your credit card balance in full every month.
Congratulations! You’ve achieved a degree of financial independence that a lot of Americans spend their entire lives working toward.
But here’s something you may not have considered…
You can pay off every dollar of your own debt and still suffer the consequences of somebody else’s borrowing.
Especially when that somebody happens to be the federal government.
See, Washington doesn’t borrow from some separate financial universe. It competes for financing in the same economy as the rest of us.
And when Washington borrows money on the scale we’re talking about today, the consequences can reach much further than most Americans realize.
Even those who don’t owe anybody a dime.
Washington’s $1 trillion interest bill
According to an October 17 report from Fortune, the federal government spent a staggering $1.05 trillion on net interest payments during the fiscal year 2026.
That’s approximately $2.9 billion every single day.
Now, I want to make an important distinction here.
That $2.9 billion a day isn’t how much Washington is borrowing. It’s how much Washington is paying in interest on money it has already borrowed. And already spent (or wasted, or lost).
Those interest payments are up over 8% from last year.
To put those numbers in perspective, interest on the federal debt is now the third-largest category of federal spending, behind Social Security and Medicare.
Interest payments consumed 14% of the entire federal budget in fiscal 2026.
Think about that for a moment. More than one dollar out of every seven spent by the federal government went toward servicing its existing debt.
Not building roads. Not maintaining bridges. Not providing medical care or Social Security payments. Not building Tomahawk missiles or paying disabled veterans’ benefits.
Just paying interest.
And according to the Peter G. Peterson Foundation’s estimate cited by Fortune, those interest costs reached consume the largest share GDP ever – surpassing the previous record set in 1991.
Of course, governments borrow money all the time. Sometimes for very good reasons, such as financing infrastructure or responding to emergencies.
Borrowing itself isn’t necessarily the problem.
The problem is what happens when enormous, persistent deficits require enormous, persistent borrowing – year after year after year.
And here’s where the consequences become personal.
Washington borrows from the same economy we do
Let’s talk about something economists call crowding out.
The underlying idea is fairly straightforward: There’s a finite supply of savings and capital available at any given time, and borrowers compete to attract it.
That includes individuals financing homes and vehicles, businesses borrowing to expand, and governments borrowing to finance their spending.
Now, it isn’t literally one enormous bank account that everybody draws from. Banks create credit, foreign investors supply capital, and the Federal Reserve influences borrowing conditions.
But there is a connection between government borrowing and private borrowing. And it’s an important one.
The Congressional Budget Office explains that greater federal borrowing can increase interest rates, reducing private investment as the government competes with businesses for available financing.
In everyday terms, here’s how the process works:
When the government borrows more, it increases demand for financing. That additional demand can exert upward pressure on interest rates. Higher rates, in turn, make borrowing more expensive for businesses and households.
Now, federal borrowing isn’t the only influence on interest rates. Inflation, Federal Reserve policy, economic growth and international demand for U.S. debt all matter, too.
But the relationship is real.
And consider what happens when borrowing becomes more expensive.
A young family that could afford a mortgage at 5% might find that same house unaffordable at 7%.
A business owner who planned to borrow money for new equipment might discover that the additional interest expense makes the expansion unprofitable.
A manufacturer might postpone building another facility. A small business might delay hiring additional workers.
Those are very real economic consequences.
But you might be thinking, “Peter, none of those examples applies to me. I don’t need a mortgage or a business loan.”
Fair enough.
Unfortunately, that doesn’t mean you’re insulated.
Why even debt-free families pay the price
Let’s go back to that mortgage-free homeowner I mentioned earlier.
Imagine you’re approaching retirement. You’ve paid off your house, and you’re thinking about selling it, downsizing and moving closer to your grandchildren.
You’re not planning to borrow any money. But what about the person who wants to buy your house?
Chances are, that person needs a mortgage.
If higher borrowing costs have reduced the number of buyers who can afford your home, you may have to wait longer to sell or accept a lower price than you expected.
Even though you don’t owe a penny, the availability and cost of credit can still affect one of your family’s most valuable assets.
And that’s only one example.
Consider the business where you work. Maybe you’ve been there for 25 years, you earn a good salary, and you’re counting on a few more years of raises before retirement.
But what happens if your employer can’t justify borrowing the money needed to expand?
Maybe the company postpones an expansion. Maybe it holds off on hiring. Maybe annual raises become smaller because revenue isn’t growing as quickly as expected.
Your personal finances might be in excellent shape. But your employer operates in an economy where the cost of credit matters.
There’s another, less obvious consequence, too.
When businesses can’t afford to invest in better equipment and more efficient production, their costs can remain higher than they otherwise would be.
Those costs can eventually show up in the prices customers pay.
Don’t take my word for it, either. The Government Accountability Office specifically identifies higher borrowing costs, slower wage growth and more expensive goods and services as potential consequences of mounting federal debt.
In other words, you don’t have to borrow money yourself to be affected by rising borrowing costs.
And we haven’t even discussed the consequences for taxpayers yet.
The federal debt problem feeds on itself
Here’s where the situation gets especially uncomfortable.
As Washington accumulates more debt, its interest expenses grow. And when existing government debt comes due, refinancing it at higher interest rates can make those expenses grow even faster.
Meanwhile, persistent inflation complicates the Federal Reserve’s job.
In September, the Fed raised its benchmark interest rate by a quarter of a percentage point, bringing its target range to 3.75%–4.00%.
And according to Investopedia, Fed officials have expressed serious concerns about stubborn inflation and debated whether additional interest rate increases will be necessary.
Here’s the dilemma:
Higher interest rates can help restrain inflation, but they also raise borrowing costs throughout the economy. And as federal debt matures and must be refinanced, those higher rates can gradually increase Washington’s interest expenses.
That leaves the government facing some difficult choices.
They can attempt to reduce spending, increase tax revenue, or continue borrowing to cover the gap.
None of those options comes without consequences.
Cuts to government spending can affect public services and programs Americans depend on. Higher taxes can leave households and businesses with less money available for their own priorities.
And continuing to borrow can compound the problem.
Now, I don’t want to suggest that this automatically leads to some inevitable financial catastrophe. Stronger economic growth, changes in fiscal policy and lower interest rates can all influence the outcome.
But growth alone may not be enough.
The Congressional Budget Office projects that federal debt will continue rising substantially relative to the size of the economy over the next decade under current law. And the GAO has described the nation’s long-term fiscal path as unsustainable.
That’s not exactly reassuring.
What concerns me most is that Washington’s interest bill doesn’t exist in isolation. It influences the choices available to policymakers, businesses and families throughout the economy.
And those consequences can accumulate for years before most people recognize what’s happening.
You can’t control Washington’s debt. But you can control your own decisions.
I don’t know exactly how Washington will address its borrowing problem.
Will Congress eventually get serious about spending? Will policymakers raise taxes? Will stronger economic growth give the government some breathing room?
I certainly hope our elected representatives can find a responsible path forward.
But here’s what I do know: You don’t have to wait for Washington to get its financial house in order before making decisions about your own savings.
For me, one of the most compelling reasons to consider physical precious metals is that they represent a different kind of financial ownership.
Physical gold, for example, isn’t somebody else’s promise to repay a debt. Its value doesn’t depend on the creditworthiness of the federal government or a private borrower.
That’s an important distinction in an economy increasingly dependent on borrowing.
And it’s one reason gold has such a long history as a store of value.
If you’re interested in learning more about what makes physical gold different from other forms of savings, I’ve explored those characteristics in greater detail here: Why Physical Gold?
Now, that doesn’t mean gold is immune to economic conditions. Its price fluctuates, it doesn’t generate income, and there’s no guarantee it will rise in value whenever inflation or government borrowing increases.
But diversification isn’t about finding one perfect asset.
It’s about recognizing that different forms of savings carry different risks – and considering whether concentrating everything in one part of the financial system makes sense for your long-term goals.
A Precious Metals IRA is the only way I know of to own physical precious metals within a tax-advantaged retirement account.
Remember that paid-off mortgage we started with?
You’ve worked hard to get your financial affairs in order. Maybe you’ve spent decades making careful decisions so you can enjoy a comfortable retirement without the burden of debt.
That’s an accomplishment worth celebrating.
But unfortunately, being debt-free doesn’t mean being free from the economic consequences of debt.
Especially when Washington’s borrowing continues to grow.
The dollar buys less today than it did a year ago, a decade ago, a generation ago. That slide is the predictable result of endless printing and borrowing. Dr. Ron Paul believes the FED has the answer. But they’re keeping it to themselves. Fortunately, a new financial chart has publicly exposed their secret moves. See it for yourself: https://freekit.birchgold.com/lf/ro...D_v02a_article&placement=article&cid=rp_media
To learn more about how physical gold could help protect your retirement portfolio, click here to get your FREE info kit on Gold IRAs from Birch Gold Group. And now introducing a Crypto IRA to capitalize on the fastest growing market in the world.
Tweet
Continue reading...
[ H/T The Burning Platform ]
