The interest payments of the U.S. federal government on the national debt have exceeded $1 trillion for the first time in fiscal year 2025. The interest expenses are now higher than both defense spending and Medicare—this has never happened before in American history.
Both Wall Street analysts and social media users are referring to 'Weimar' as warnings of a fiscal crisis increase. At the same time, the U.S. Department of the Treasury sees stablecoins as a strategic tool to absorb the growing flow of government debt.
The figures: a crisis in full view
In the fiscal year 2020, net interest payments amounted to $345 billion. By 2025, this has nearly tripled to $970 billion. This is about $100 billion above defense spending. When we account for all interest on publicly issued debt, the amount has for the first time exceeded $1 trillion.
The Congressional Budget Office expects total interest payments to amount to $13.8 trillion over the next ten years. That's nearly double what has been paid in the past twenty years after adjusting for inflation.
The Committee for a Responsible Federal Budget warns that in an alternative scenario—where tariffs are declared illegal and temporary components of recent legislation become permanent—the interest burdens could reach $2.2 trillion by 2035. That's 127% more than now.
Why this is unprecedented
The debt-to-GDP ratio has now reached 100%, a level not seen since World War II. By 2029, this ratio will exceed the record of 106% from 1946 and continue to rise to 118% in 2035.
The most concerning aspect is the self-reinforcing effect of this crisis. The federal government borrows about $2 trillion annually, of which about half is used to pay existing debts. CRFB analyst Chris Towner warned of a potential 'debt spiral': 'If the people who lend us money become afraid that we won't pay it all back, interest rates could rise—that means we have to borrow even more just to pay the interest.'
Historic momentYearMeaningInterest higher than defense spending2024First time since World War IInterest higher than Medicare2024Debt service now largest healthcare expenditureDebt reaches 100% of GDP2025First time since post-WWIIDebt higher than 1946 peak (106%)2029Above historic all-time high
Source: BeInCrypto Market reaction: 'Weimar' and 'buy gold'
On social media, there was a massive reaction to these predictions. 'The path is unsustainable if nothing changes,' wrote one user. Another posted 'weimar'—referring to the German hyperinflation of the 1920s. 'The era of debt service,' wrote someone else, reflecting a shared sentiment that America is entering a new era.
The majority called for flight to hard assets such as gold, silver, and real estate. Notably, there was little mention of Bitcoin, indicating that traditional 'gold bugs' thinking still predominates in retail sentiment.
Market implications
In the short term, the rising issuance of government bonds is causing market liquidity to be absorbed. With risk-free interest rates around 5%, stocks and cryptocurrencies face structural headwinds. In the medium term, fiscal pressure may lead to stricter regulations and higher taxes on crypto.
In the long term, however, a paradox arises for crypto investors. As fiscal instability increases, the narrative of Bitcoin as 'digital gold' becomes stronger. The worse the traditional financial system performs, the more compelling it becomes to own assets outside the system.
Stablecoins: crisis meets solution
Washington has found an unexpected ally in its fiscal problems. The GENIUS Act, signed in July 2025, requires stablecoin issuers to maintain 100% reserves in U.S. dollars or short-term government bonds. This effectively makes stablecoin companies structural buyers of government debt.
Treasury Secretary Scott Bessent described stablecoins as 'a revolution in digital finance' and stated that they 'will lead to an increase in demand for U.S. government bonds.'
According to estimates from Standard Chartered, stablecoin issuers will purchase $1.6 trillion in government bonds over the next four years. This is enough to absorb all new issuances during Trump's second term. This is more than China's current holdings of $784 billion, allowing stablecoins to take on the role of buyers as foreign central banks reduce their U.S. debt.
Beginning of the era of debt service
The U.S. fiscal crisis creates unexpected opportunities for cryptocurrencies. While traditional investors primarily flee to gold, stablecoins are becoming increasingly important for the U.S. debt market. That Washington embraces stablecoin regulation is not just about innovation—it's also a matter of survival. The era of debt service has begun, and crypto could surprisingly benefit from this.
