US Interest Burden Nears $1.8T as Refinancing Costs Rise

US annual interest on federal debt stood at $508 billion in mid-2020. By the first quarter of 2026, it had climbed to $1.22 trillion. Total debt moved from $26.4 trillion to roughly $39 trillion over that period. The average refinancing rate on that debt is 3.1%. Raise that to an assumed 4.5% – roughly where 10-year yields trade today – and the annual tab jumps to nearly $1.8 trillion.

Those numbers are not theoretical. The current interest burden is 3.8% of GDP. At a sustained 4.5% refinancing rate, it would hit 5.8% of GDP. The same math applies to Japan, France, Italy, the UK, and Germany. Governments do not repay maturing debt on a net basis. They roll it into new paper. When rates rise, each rollover locks in a higher cost. New debt gets added on top. The compounding is automatic.

Why Inflation Beats Deflation as the Big Risk

Central banks have the power to cap yields by buying government bonds with newly created money. They have let rates climb in recent years, treating it as normalization. At some point, the political cost of rising interest burdens will force intervention. That intervention would expand the money supply and, eventually, push goods prices higher.

The primary risk for an investor over the next decade is inflation, not deflation. Savings accounts and government bonds will not deliver a positive real return after taxes. The stock market can, provided entry prices are not inflated. Buying equities at peak valuations risks failing to hit that real return target.

Gold and silver serve as portfolio insurance with upside potential. The current correction in precious metals does not change the structural case for holding a position within a fiat-money system that is actively breaking under its own weight.

The US Treasury's next refunding announcement and the Fed's June dot plot will offer the next real-time test of whether the market agrees with the Titanic analogy or treats it as hyperbole.