Venmo Can't Fix America's Debt Crisis

The US Treasury now accepts payments to help pay down the national debt via Venmo, PayPal, debit cards, credit cards, and bank transfers. While the update has gone viral, many are skeptical of its impact, as the national debt has ballooned to $36.7 trillion and is growing at an alarming pace. Experts warn that a high national debt can lead to severe consequences, including a "debt death spiral."

The US Treasury has recently announced that it now accepts payments to help pay down the national debt via Venmo, PayPal, debit cards, credit cards, and bank transfers. This innovative update has sparked both interest and skepticism among the public, as the national debt has ballooned to $36.7 trillion and continues to grow at an alarming pace [1].

The national debt, which stood at less than $6 trillion in 2000, has surged past $37 trillion in mid-2025, marking a 520% increase in just 25 years. This rapid growth is compounding the interest payments, which are now the second-largest line item in the federal budget, overtaking defense spending. The US now pays $1.11 trillion in annual interest, more than the entire $1.10 trillion spent on national defense [1].

Experts warn that such a high national debt can lead to severe consequences, including a "debt death spiral." The national debt is projected to exceed $67 trillion by 2035, even under optimistic assumptions about economic growth. Deficits continue to spiral, with the shortfall for FY2025 already standing at $1.36 trillion, a 14% increase over last year [1].

While the new payment methods are a step towards addressing the debt crisis, their impact remains uncertain. The Federal Reserve and foreign central banks have historically absorbed a significant portion of Treasury issuances, but they are now retreating due to political risks and economic uncertainty. The bond crisis is real, with total non-financial U.S. debt now surpassing the GFC peak of 234% of GDP [1].

Investors should remain alert and cautious. Traditional portfolio models may struggle under the weight of rate volatility and earnings compression. Instead, investors may be better off owning the short end of the yield curve while actively trading the equity portion according to the second derivative of inflation and growth.

In conclusion, while the US Treasury's new payment methods are a step in the right direction, they are unlikely to solve the debt crisis alone. Addressing the debt death spiral will require aggressive reforms and sustainable economic growth.

References:
[1] https://www.investing.com/analysis/us-debt-spiral-accelerates-are-we-nearing-the-point-of-no-return-200664663