Introduction
As of September 2025, the U.S. federal debt has soared to a record $37.4 trillion, a scale that poses a significant hidden danger to the global economy. This figure not only reveals the fiscal difficulties of the United States but also acts as a catalyst for a global debt crisis. The current debt problem is not confined to the U.S.; it represents a core challenge within the global economic system. With imbalances in fiscal policy, slowing productivity growth, and the accumulating fragility of the monetary system, the debt crisis is showing a trend of spreading, affecting international trade, monetary policies, and global geopolitics. This article will review the historical evolution of U.S. debt to analyze its current debt crisis and its profound impact on the global economy.
Historical Background of the Debt Crisis
The debt crisis is not accidental; it often stems from policy failures, but its effects quickly spread to the real economy. Historically, from the currency devaluation of the Roman Empire to the debt crises following the Industrial Revolution in 19th-century Britain, debt expansion has always accompanied major social transformations. The current path of the U.S. debt crisis is similar to that of the Roman Empire—the U.S. debt-to-GDP ratio has exceeded 120%, far surpassing the healthy range of 60%-80% suggested by the International Monetary Fund. This ratio not only suppresses economic growth but also exacerbates inflationary pressures and financial instability, potentially even leading to a restructuring of global capital flows. In September 2025, the yield on the U.S. 10-year Treasury note reached 4.05%, reflecting the synchronous growth of global debt. The total global debt has now exceeded $324 trillion, a change that has drawn widespread attention from global financial markets.
Historical Evolution of U.S. Debt
Since its founding in 1789, the U.S. public debt has gradually accumulated. Particularly during World War II, the issuance of massive war bonds rapidly pushed the debt-to-GDP ratio to 120%. However, the post-war rapid economic recovery, aided by Keynesian policies and the stability of the Bretton Woods system, alleviated the debt burden. Entering the 1970s, due to the Vietnam War, accelerating inflation, and increased social welfare spending, U.S. debt entered a phase of accelerated growth. By 1980, U.S. debt had swollen to $907 billion, with the debt-to-GDP ratio rebounding to 32%. However, during the Clinton administration in the 1990s, the U.S. achieved a fiscal surplus, and debt was briefly brought under control.
Entering the 21st century, the U.S. debt problem reached new heights. The September 11, 2001 attacks and subsequent War on Terror triggered another expansion of debt. By the 2008 financial crisis, U.S. debt had reached $10 trillion. Thereafter, the Obama administration implemented large-scale fiscal stimulus plans, leading to continued debt growth, a trend exacerbated by the COVID-19 pandemic in 2020. By 2025, the total U.S. public debt reached $37.4 trillion, with a debt-to-GDP ratio of 124%. This marks a new phase in the U.S. debt crisis.
Manifestations of the Current Debt Crisis
As of September 2025, the U.S. debt crisis is no longer just a potential risk but is gradually evolving into a real threat. The soaring debt-to-GDP ratio has begun to severely impact the U.S. economy. According to U.S. Treasury data, the growth rate of debt is exponential, especially under the intertwined effects of war, pandemics, and social transformations. The Federal Reserve's interest rate policies have also exacerbated the debt situation. The yield on the 10-year Treasury note in 2025 is 4.05%, and policy adjustments by foreign creditor nations like Japan and China are further posing risks to the global bond market.
Furthermore, the surge in household and corporate debt also reflects the fragility of the U.S. economy. Data from the Federal Reserve shows that total household debt has reached $20.1 trillion, while corporate debt has also hit a record high. These figures indicate that the U.S. debt structure is extremely complex, and any policy misstep could trigger a chain reaction.
The Mechanism of Bond Markets and Global Linkages
The linkage mechanism of the global debt market is key to the current debt crisis. U.S. Treasury bonds, as the global "risk-free" benchmark, directly affect global capital flows and financial stability. The role of the bond market in the global economy cannot be underestimated, especially against the backdrop of rising U.S. debt. The increase in bond yields is not just a domestic U.S. issue; it has profound implications for global capital flows. In September 2025, global bond yields generally rose, particularly as the yield gap between the U.S. and Japan gradually narrowed. Changes in global capital flows suggest a potential shift in the global financial landscape.
Geopolitics and the Debt Crisis
The impact of the debt crisis is not limited to the economic sphere. As the debt burden intensifies, the U.S.'s geopolitical flexibility faces severe tests. Policy adjustments by China and other major creditor nations threaten the U.S.'s dominant position in the global economy. Additionally, the acceleration of de-dollarization, especially with the rise of BRICS countries, signals a gradual weakening of the U.S. dollar's role in global trade, posing a significant challenge to the U.S. debt market.
The Dilemma of Solutions
The path to resolving the debt crisis is not straightforward. Even policies such as spending cuts and tax increases are difficult to implement effectively in the short term to alleviate the debt burden. The current debt growth trend appears unsustainable. Adjustments in fiscal policy and debt restructuring may become the primary means in the future. However, any reform is likely to face political resistance and social discontent. Indeed, economists and policymakers face the challenge of balancing short-term pressures with long-term structural issues.
Global Trends and Future Outlook
The intensification of the debt crisis may accelerate changes in the global economy. Trends such as de-dollarization and the revival of the gold standard will become new dynamics in the future global economy. As the debt issue continues to ferment, worsening wealth inequality could trigger broader political and social unrest. Therefore, countries worldwide need to enhance coordination and jointly promote sustainable debt management solutions to prevent the global economy from descending into a deep crisis.
Conclusion
The U.S. debt crisis is rapidly evolving into a global debt crisis. A debt of $37.4 trillion, a 124% debt-to-GDP ratio, and rising bond yields signal significant risks to global financial markets. In this context, investors, policymakers, and economists need to deeply recognize the complexity of the debt crisis and take pragmatic measures to address the potential global financial shocks it may bring.
