The U.S. federal government is surpassing $1 trillion in interest paid on national debt for the first time in fiscal year 2025. Interest expenses now exceed both defense spending and Medicare; this is a first in American history.
Wall Street analysts and users on social media frequently use the term "Weimar" in response to rising warnings of financial crisis. Meanwhile, the U.S. Treasury Department is positioning stablecoins as a strategic tool to absorb the growing national debt.
Figures: The Crisis Before Our Eyes
In the 2020 fiscal year, net interest payments were $345 billion. By 2025, this figure had nearly tripled to $970 billion—surpassing defense spending by about $100 billion. When considering all interest on publicly held debt, this amount surpasses $1 trillion for the first time in history.
According to the Congressional Budget Office, cumulative interest payments over the next decade will reach a total of $13.8 trillion—this means spending twice what it has been adjusted for inflation over the last twenty years.
The Responsible Federal Budget Committee warns that in a scenario where customs duties are deemed illegal and recently enacted temporary laws are made permanent, interest costs could reach $2.2 trillion by 2035—representing a 127% increase from current levels.
Why This Situation Is Unprecedented
The debt/GDP ratio has reached 100%; this threshold has not been seen since World War II. It will exceed the 1946 peak of 106% in 2029 and reach 118% by 2035.
The most concerning issue is that this crisis has a self-perpetuating structure. The federal government borrows about $2 trillion annually, nearly half of which goes to pay the interest on the existing debt. CRFB analyst Chris Towner highlighted a potential 'debt spiral':
If our lenders suspect that we won’t be able to pay off all our debts, interest rates will rise. In this case, we will have to borrow more to cover the interest.
said. Historical FirstsYearImportanceInterest surpassed defense spending2024For the first time since World War IIInterest surpassed Medicare2024Debt interest became the largest health expenditureDebt reached 100% of GDP2025For the first time since the warDebt is expected to exceed the 106% peak in 1946 by2029A historical record will be brokenSource: BeInCrypto Market Reaction: 'Weimar' and 'Buy Gold'
These forecasts have resonated on social media. One user wrote, 'If the trend doesn’t change, it’s unsustainable.' Another referred to 'Weimar,' alluding to the hyperinflation in Germany during the 1920s. A third defined it as the 'Debt Interest Era,' emphasizing that America has entered a new phase.
The vast majority called for a shift to gold, silver, and real estate as safe havens. Notably, Bitcoin was hardly mentioned; this indicates that the traditional 'gold bug' perspective still dominates among individual investors.
Market Impacts
In the short term, the rapidly increasing bond issuance is drawing market liquidity. In an environment where risk-free returns have climbed to around 5%, stocks and cryptocurrencies are facing structural pressures. In the medium term, this financial pressure is expected to accelerate regulatory tightening and cryptocurrency taxation.
However, in the long run, there is a complete paradox for crypto investors. As financial instability deepens, Bitcoin’s 'digital gold' narrative strengthens. The worse traditional finance gets, the more appealing it becomes to turn to off-system assets.
Stablecoins: Crisis and Solutions
Washington has found an unexpected ally in this financial distress. The GENIUS Act, signed in July 2025, imposes a requirement for firms issuing stablecoins to hold reserves equal to 100% of U.S. dollars or short-term Treasury bonds. Thus, stablecoin companies are structurally becoming buyers of government bonds.
Treasury Secretary Scott Bessent said that stablecoins represent 'a revolution in digital finance and will spike demand for U.S. Treasury bonds.'
Standard Chartered predicted: Stablecoin issuers will purchase $1.6 trillion in Treasury bonds over four years—this could absorb all new issuances during Trump’s second term. This amount surpasses China’s current Treasury bond portfolio of $784 billion, positioning stablecoins as a new major player replacing foreign central banks in the U.S. debt market.
The Debt Service Era Has Begun
America’s financial crisis is creating interesting opportunities for cryptocurrency. While traditional investors rush to gold, stablecoins are quietly becoming a critical infrastructure in U.S. debt markets. Washington’s approach to stablecoin regulation is not just about innovation; it’s essentially a struggle for existence. The debt interest era has begun, and the crypto ecosystem could be the unexpected winner of this crisis.
