(A Column Speaking for the Pension Future Forum’s Wariness Toward Deficit Finance) [Kim Dae-ho’s Diagnosis] National Debt Finally Passes 40 Trillion Dollars… the Fall of Empires, “A Lesson of History” (2026-08-20)

The national debt of the United States has finally passed 40 trillion dollars.

One of the coldest and most unchanging iron laws running through the history of human civilization is that “no empire that failed to control its finances has ever escaped collapse.”

Neither the mighty force of arms that commanded the world, nor brilliant cultural achievement, nor absolute power that seemed eternal, could stand before snowballing debt and the debasement of the currency; all crumbled helplessly.

From the manipulation of the silver purity of the coinage in the ancient Roman Empire, to the successive bankruptcies of the Spanish Habsburgs in the sixteenth century, the great revolution that swallowed the French Bourbon monarchy in the eighteenth, the stripping away of the Ottoman Turks’ fiscal sovereignty in the nineteenth, and the hyperinflation of the Weimar Republic in the twentieth — history has ceaselessly played variations on the same trajectory of ruin.

Today the total federal debt of the United States, the world’s only superpower and the heart of modern global capitalism, has at last crossed the untrodden threshold of 40 trillion dollars.

It is the result of a further 10 trillion dollars accumulating in just four years and seven months since the figure reached 30 trillion dollars in January 2022. Debt that stood at less than 1 trillion dollars when the Ronald Reagan administration took office in the 1980s has thus exploded fortyfold in some four decades.

This is not a mere expansion of a statistical figure. Beneath the “Pax Americana” that has sustained the world economic order and its security for the 80 years since the Second World War, and

beneath the hegemony of the dollar as the key currency, a vast structural fissure has opened: this is a grave alarm bell announcing it.

(abridged)

The explosion of debt has always been a lethal poison eating away at a nation’s fate.

The 40 trillion dollars of debt the United States has now reached goes beyond a simple macroeconomic indicator; through the following three structural detonators it threatens the very existence of American hegemony.

The annual net interest cost of the US federal government has passed 1.1 trillion dollars.

That figure far exceeds the annual defense budget of the world’s strongest military (about 880 billion dollars) and rivals total Medicare spending.

The public’s taxes are not being invested in R&D in advanced science and technology such as AI and semiconductors — the engines of future growth — or in rebuilding infrastructure, but are being consumed solely as “interest to keep past debts alive.”

It has entered a “death spiral”: increased issuance of government bonds → rising interest rates from an oversupply of bonds → an explosion in interest costs → further bond issuance to cover the deficit.

(abridged)

The end of monetary policy and the arrival of “fiscal dominance” deserve attention.

“Fiscal dominance” refers to the phenomenon in which the scale of the fiscal deficit becomes so vast that the central bank’s monetary policy is reduced to an instrument for managing the government’s debt.

The Federal Reserve is already bound by these shackles. If it keeps the policy rate high in order to contain prices, the government’s interest burden explodes and the risk of national default grows.

If, conversely, it lowers rates or returns to quantitative easing (QE) to help the government’s finances, inflation recurs and the value of the dollar plunges.

The Fed faces the danger of losing its proper function of price stability and being reduced to a handmaiden supporting the rolling over of debt.

If the debt were “productive investment,” raising productivity decisively and generating future tax revenue, it would be controllable.

The current surge in US debt, however, stems from the natural explosion of mandatory spending such as Social Security and Medicare as the population ages, and from tax cuts and subsidy policies scattered freely by both parties alike in pursuit of votes.

An unproductive deficit structure that eats away at growth potential matches precisely the pattern of fiscal collapse in Rome in its decline or in the French monarchy.

Some offer the optimism of Modern Monetary Theory (MMT), arguing that the United States can never go bankrupt because it can issue the dollar, the key currency, itself.

But this is a delusion that forgets the essence of a key currency.

The status of key currency is not a permanent privilege granted by God; it is a “promise of credit” that holds only so long as global investors recognize the purchasing power of the dollar and US government bonds as a safe asset.

As the economist Robert Triffin warned with the “Triffin dilemma,” if the United States tolerates chronic deficits in order to supply liquidity and that debt finally exceeds its capacity to repay, confidence in the dollar itself collapses.

Global financial markets have already begun a quiet departure.

Central banks around the world are reducing their holdings of US Treasuries and increasing purchases of gold, a real asset, to record highs, and are accelerating the construction of non-dollar settlement networks centered on the BRICS.

The dollar’s share of the world’s foreign exchange reserves has fallen from the 70% range in the past to the mid-50% range. The 40 trillion dollars of debt means that the shelf life of dollar hegemony is being used up fast.

Edward Gibbon observed in The History of the Decline and Fall of the Roman Empire that “the fall of Rome was not the result of external invasion but of internal fiscal corruption and self-destructive profligacy.”

The passing of 40 trillion dollars in US federal national debt is a dangerous tightrope walk that no nation in the history of capitalism has ever attempted.

The warning lights of history — Rome’s debased silver coinage, Spain’s serial defaults, the interest-driven ruin of the French monarchy, the Ottoman Turks’ loss of sovereignty, Weimar’s hyperinflation — are glowing red at the very heart of twenty-first-century digital finance.

The arrogance of believing that debt can be covered forever by printing money without limit has always ended in the fall of an empire.

We must see through the optical illusion playing out atop a sandcastle of 40 trillion dollars in debt, and coolly build up the nation’s basic strength and real competitiveness in preparation for the great upheaval to come in the global financial order.

For an empire that has forgotten the lessons of history, no merciful future exists.

Kim Dae-ho, Director of the Global Economic Research Institute [email protected]

▶ View the original article: [Global Economic] https://www.g-enews.com/article/Opinion/2026/08/202608200811104142906806b77b_1