At ITM Trading, we often hear arguments dismissing the significance of the national debt—comments like, “The debt doesn’t matter.” But for those of us who are concerned about safeguarding our financial futures, we know that the national debt does, in fact, matter quite a bit. It’s not just about the government borrowing money, but how that debt affects every citizen and taxpayer.

The US Debt Clock serves as a critical tool for understanding the scope of this issue. When you visit the website, one of the first numbers you’ll see is the US national debt, currently sitting at a staggering $35 trillion and counting. But what does this really mean for you? How does it impact your wealth, retirement, and day-to-day life?

Breaking Down the National Debt

When we look at the national debt on the US Debt Clock, it’s easy to get lost in the enormity of the number. However, what’s more striking is the debt per citizen and debt per taxpayer. As the debt is split among all citizens, the current debt per citizen is over $100,000. But as we know, not every citizen is a taxpayer. Many are unemployed, retired, or underage, which means the true financial burden falls on those who do pay taxes. The debt per taxpayer sits closer to $270,000—a much more daunting figure.

What does this mean? While the government is ultimately responsible for managing this debt through borrowing and taxation, it’s the taxpayer who shoulders the burden. The government’s borrowing impacts interest rates and inflation, which in turn affects your purchasing power, retirement savings, and overall financial security.

Connecting the Dots: US Federal Spending and Deficit

The US government manages its debt by balancing spending with revenue. On usdebtclock.org, you can see the federal spending numbers alongside the federal deficit. Federal spending includes everything from healthcare to defense, and when the government spends more than it collects in taxes, this creates a deficit. Right now, the numbers tell us that the government is spending far more than it is earning, which only adds to the national debt.

For the financially conservative, this is alarming because the deficit doesn’t just affect the government—it trickles down to each taxpayer. When spending outpaces revenue, the government borrows more, increasing debt and driving inflation higher. As a result, your dollars don’t stretch as far, and your retirement savings may be at greater risk.

The Debt-to-GDP Ratio: A Warning Sign

One of the most critical numbers to watch on the US Debt Clock is the US federal debt-to-GDP ratio. This ratio compares the national debt to the country’s gross domestic product (GDP), which is the total value of all goods and services produced within a year. In 1960, the debt-to-GDP ratio was manageable, but today it’s skyrocketed to over 123%.

What does this mean? A debt-to-GDP ratio over 100% indicates that a country’s debt has outpaced the value of everything it produces in a year. This is alarm bell territory because it suggests that the government is borrowing at unsustainable levels, making it harder to manage future crises, service the debt, or invest in productive growth.

When so much of the government’s revenue is being used to pay interest on the debt, there’s less flexibility to invest in growth and fewer tools to handle new economic challenges. The consequences could include a slowdown in economic growth, higher borrowing costs, and even the risk of default—though we aren’t suggesting the US will default tomorrow, it’s certainly a concern worth paying attention to.

The Impact on Your Wealth

As a taxpayer or someone holding dollar-denominated assets, the growing national debt has direct implications for your financial future. The more the government borrows, the more pressure there is to continue inflating the currency, which erodes your purchasing power. The higher the debt climbs, the harder it is for the government to stimulate productive growth, leaving us with stagnant economic conditions and, potentially, a crisis on the horizon.

The US Debt Clock offers a stark reminder of these risks, and understanding these numbers is crucial for anyone concerned about economic stability and personal financial security.

Stay tuned for part two of this series, where we’ll dive deeper into the “time machine” feature of the US Debt Clock and explore what the future may hold if this debt trajectory continues.