U.S. federal government interest payments on the national debt exceeded $ 1 trillion for the first time in fiscal year 2025. Interest expenses are now higher than both the defense budget and Medicare – for the first time in American history.
Analysts on Wall Street and users on social media are now warning with references to 'Weimar' as warnings of a financial crisis increase. At the same time, the U.S. Treasury is positioning stablecoins as a strategic tool to manage the increasing amount of government debt.
The numbers: A crisis in full view
In fiscal year 2020, net interest expenses amounted to $345 billion. By 2025, this figure had nearly tripled to $970 billion – and exceeded defense spending by about $100 billion. Including all interest on publicly held debt, the amount surpassed $1 trillion for the first time.
The Congressional Budget Office estimates that total interest payments over the next ten years will amount to $13.8 trillion – nearly double the inflation-adjusted amount spent in the last two decades.
The Committee for a Responsible Federal Budget warns that in an alternative scenario where tariffs are deemed illegal and temporary provisions in recent legislation become permanent, interest expenses could reach $2.2 trillion by 2035 – an increase of 127% from current levels.
Why this is unprecedented
Debt as a percentage of GDP has now reached 100%, a level not seen since World War II. By 2029, it will surpass the peak level from 1946 at 106% and continue to rise to 118% by 2035.
The most concerning aspect is that this crisis is self-reinforcing. Federal authorities borrow about $2 trillion annually, of which about half goes solely to servicing existing debt. CRFB analyst Chris Towner warns of a potential 'debt spiral': 'If those who lend us money become concerned that we won't pay it all back, we could face higher interest rates – which means we have to borrow more to pay the interest.'
Historical milestone Year Significance Interest expenses exceed defense budget 2024 First time since World War II Interest expenses exceed Medicare 2024 Debt servicing is now the largest health expenditure Debt reaches 100% of GDP 2025 First time since the post-war period Debt surpasses peak level from 1946 (106%) 2029 Will exceed all historical records
Source: BeInCrypto Market reaction: 'Weimar' and 'Buy Gold'
Social media exploded after these forecasts. 'The development is not sustainable unless it changes,' wrote one user. Another wrote 'weimar' – referencing German hyperinflation in the 1920s. 'Debt service era,' declared a third, capturing the sentiment that the U.S. has entered a new phase.
The vast majority called for a safe haven in hard assets – gold, silver, and real estate. It is remarkably little mention of Bitcoin, suggesting that traditional 'gold standard' thinking still dominates among private investors.
Implications for the market
In the short term, increased issuance of government bonds absorbs market liquidity. With risk-free interest rates near 5%, stocks and cryptocurrencies face structural challenges. In the medium term, the increased financial pressure could lead to stricter regulation and higher crypto taxes.
But in the long run, a paradox arises for crypto investors. As economic instability increases, the narrative of Bitcoin as 'digital gold' strengthens. The worse traditional finance performs, the stronger the argument for assets outside the system.
Stablecoins: Crisis meets solution
Washington has gained an unexpected ally in its economic predicament. The GENIUS Act, signed in July 2025, requires that issuers of stablecoins must have 100% reserves in U.S. dollars or short-term Treasury bonds. This effectively turns stablecoin companies into structural buyers of government debt.
Finance Minister Scott Bessent called stablecoins 'a revolution in digital finance' that will 'lead to a significant increase in demand for U.S. Treasury bonds.'
Standard Chartered estimates that issuers of stablecoins will buy Treasury bonds for $1.6 trillion over four years – enough to absorb all new issuance in Trump's second presidential term. This will surpass China's current holdings of $784 billion and position stablecoins as a substitute as foreign central banks reduce their exposure to U.S. debt.
The debt service era begins
The U.S. financial crisis paradoxically opens doors for cryptocurrency. While conventional investors rush towards gold, stablecoins quietly become critical infrastructure for the market for U.S. government debt. Washington's embrace of stablecoin regulation is not just about innovation – it's about survival. The debt service era is underway, and crypto could become an unexpected winner.
