The interest payments on U.S. federal government bonds exceeded $1 trillion for the first time in the 2025 fiscal year. The spending on interest payments surpassed both defense and Medicare costs. This is a first in U.S. history.
Analysts on Wall Street and users of social media are raising alarms with the term "Weimar," intensifying concerns over a fiscal crisis. Meanwhile, the U.S. Treasury is positioning stablecoins as a strategic tool to maintain the balance of supply and demand for burgeoning government bonds.
The numbers reveal an exposed crisis
Net interest payments for the fiscal year 2020 were $345 billion. This amount is projected to swell to about $970 billion by 2025, nearly tripling and exceeding defense spending by around $100 billion. Including interest payments on the total public debt, it surpassed the $1 trillion mark for the first time.
The Congressional Budget Office estimates that the total interest payments over the next decade will reach $13.8 trillion. This is roughly double the inflation-adjusted total of the past 20 years.
The Responsible Federal Budget Committee has warned that if tariffs are criminalized and the recent temporary measure in law is made permanent, interest payments could rise to $2.2 trillion by 2035, an increase of 127% from current levels.
Unprecedented reasons
The government debt-to-GDP ratio has reached 100%. This is the highest level since World War II. By 2029, it is expected to surpass the 1946 peak (106%) and rise further to 118% by 2035.
The most serious aspect is that this crisis is self-reinforcing. The government borrows about $2 trillion annually, half of which goes to interest payments on existing debt. Chris Towner of the Responsible Federal Budget Committee expressed concerns about a 'debt spiral,' warning that if lenders doubt repayment capacity, interest rates will rise, leading to a vicious cycle of borrowing more to pay interest.
A historic first: Year of significance for interest payments surpassing defense spending for the first time since World War II. In 2024, interest payments surpassed Medicare for the first time. Debt costs in the health sector reached their peak, with debt hitting 100% of GDP. By 2025, it will exceed the post-World War II peak of 106% in 1946, and by 2029, it will set a new record.
Source: BeInCrypto Market Reaction: 'Weimar' and 'Gold Buying'
Social media has been abuzz with such forecasts. Posts stating, 'This trajectory is unsustainable' and voices suggesting parallels with 'Weimar' and Germany's hyperinflation in the 1920s have been observed. There are also voices noting, 'We are in a debt service era,' symbolizing the sentiment that the U.S. has entered a new phase.
Many have recommended fleeing to 'real assets' such as gold, silver, and real estate. There has been almost no mention of Bitcoin, indicating a strong traditional 'gold standard' inclination among small investors.
Impact on the market
Currently, the surge in Treasury bond issuance by the Treasury is absorbing market liquidity. Risk-free interest rates have risen to around 5%, and stocks and cryptocurrencies are facing structural headwinds. In the medium term, increasing fiscal pressures are expected to prompt regulatory changes and strengthened cryptocurrency taxation.
However, in the long term, paradoxical opportunities arise for cryptocurrency investors. As fiscal instability deepens, the argument for Bitcoin as 'digital gold' strengthens. The more trust in traditional finance erodes, the more the value of assets outside the system is reassessed.
Stablecoin crisis and solutions
Washington unexpectedly gained an ally amid fiscal distress. The GENIUS Act, enacted in July 2025, mandates stablecoin issuers to hold 100% of their reserves in U.S. dollars or short-term government bonds. This effectively made stablecoin companies structural buyers of Treasuries.
Treasury Secretary Scott Bessen positioned stablecoins as a 'digital financial revolution,' stating they would 'significantly increase demand for U.S. Treasuries.'
According to estimates from Standard Chartered Bank, stablecoin issuers are expected to purchase $1.6 trillion worth of T-bills (short-term government bonds) over the next four years. This is an amount large enough to absorb all new Treasury bond issuance planned for President Trump's second term. It significantly surpasses China's holdings of U.S. Treasury bonds ($784 billion) and is set to become a major buyer to replace overseas central banks moving away from U.S. Treasuries.
Dawn of the debt repayment era
The U.S. fiscal crisis ironically opens a new avenue for cryptocurrencies. While traditional investors flee to gold, stablecoins are quietly becoming the foundation of the U.S. Treasury bond market. The essence of Washington's push for stablecoin regulation is no longer just about promoting innovation — it is a 'survival' strategy. The dawn of the debt repayment era is becoming a reality, and cryptocurrencies may become its 'unexpected beneficiaries.'
