The U.S. dollar took a walloping this week after the U.S. Treasury announced it would double purchases of long-term U.S. debt instruments beginning next month.
In short, the federal government once again must buy back a larger portion of its own bonds to help finance the exploding national debt, which surpassed $40 trillion for the first time on Wednesday.
Why is the federal government forced to buy back more of its own bonds and monetize its debt? Because investor appetite and sentiment for U.S. debt is waning. Buyers aren’t eager to gobble up the glut of new federal debt issues, at least at current yield rates.
If the American economy was booming and buyers thought U.S. bonds were a great long-term investment, the Treasury wouldn’t have to purchase its own debt instruments to reduce its borrowing costs, service its debts and fulfill its other financial obligations.
That’s bad news for the greenback, whose exchange value fell to a three-month low against six other major currencies this week, sparking a strong rebound in gold and silver prices. Gold topped $4,600 an ounce on Friday while silver flirted with $70.
Extend and Pretend
The official solution to the nation’s recording-breaking debt problem is repeated like a broken record.
“We’re going to have to grow our way out of this,” Treasury Secretary Scott Bessent responded on Thursday when asked about the burgeoning federal debt.
“We want growth in our country,” President Donald Trump said during his Republican nomination speech in 2024. “That’s what’s going to pay off our debt.”
Similar claims and remarks have been made by other presidents and government authorities over the last five decades. They’ve used such assertions to institute tax cuts and implement policies designed to boost foreign trade and juice gross domestic product (GDP).
Economic growth, however, never exceeds deficit spending enough to reduce the national debt, which keeps growing at an accelerating and unprecedented pace, and has surpassed 125 percent of annual GDP.
Meanwhile, elected and unelected officials continue to extend and pretend, imagining the nation’s financial liabilities are manageable while ignoring the underlying reason for the unsustainable indebtedness: excessive federal spending and borrowing for warfare, welfare and ever-rising debt service.
Loss of Common Cents
It’s as if fiscal authorities and politicians lose their collective mind and common sense once they venture inside the Beltway while collecting their depreciating federal paychecks.
Issuance of the last U.S. penny last November should have served as a wakeup call. The spiraling public debt, and its associated inflation, is rapidly debasing the nation’s currency, eroding confidence in the dollar and deterring demand for U.S. debt instruments.
When its costs 4 cents to make a single Lincoln penny, you can’t grow your way out of fiscal reality. Producing more pennies, digitizing more dollars or recycling more of your own debt isn’t a solution. The elementary school math simply doesn’t work.
In 1992, when the federal debt totaled $4 trillion, Democratic strategist James Carville instructed presidential campaign workers to maintain focus on the primary concern of American voters. “It’s the economy, stupid,” he advised.
Today, with the national debt 10 times larger, American voters should enlighten the befuddled politicians and money-crunching bureaucrats in Washington, D.C., by repeating the phrase “It’s the debt, stupid.”
© 2026 Stuart Englert. All rights reserved.
Englert is the author of “Rigged: Exposing the Largest Financial Fraud in History” and “Patient Millionaire: A Financial Memoir.”