As of September 2018, the combined government, household, and business debt in the U.S. was approximately $50.7 trillion.1 Written out that looks like this: $50,700,000,000,000. Interest in one form or another is being paid on all of it all the time. If we estimate a theoretical average annual interest rate of say 3%, the interest on all that debt would be 1.5 trillion dollars a year, which looks like this: $1,500,000,000,000. The actual amount the American people are paying every year is probably higher.
In 2017, interest paid on U.S. federal government debt alone was over $458.54 billion.1 This is paid out of the federal budget. Interest on household debt is paid through mortgages, student loans, car payments, and other types of personal debt, while interest on business debt is paid as part of the operating expenses of U.S. businesses.
If an economy is creating most of its money supply by lending (see How Money is Created), it stands to reason that it will have a lot of debt. In the U.S. about 90% of our money is created by bank lending, so you might think that combined debt would equal about 90% of the money supply. However our money supply is nowhere close to $50.7 trillion. The money supply (M2) as of September 2018 was about $14.248 trillion.2
The level of debt has far surpassed the supply of available money. This happens because only the banks have the power to create money when they lend, but there are other lenders and debt holders besides banks. (For a more complete explanation, see How Bank-Account Money Works.) Debt can easily surpass money, but since we have a system where money (other than coins) can only be created by debt, it’s fairly impossible for money to ever catch up. Debt continues to grow and it always grows faster than money, which makes debt repayment more and more difficult.
It doesn’t have to be this way. The Alliance For Just Money is working to change the system, so money can be created debt-free (see, The Just Money Solution). With debt-free money feeding into the economy it would finally be possible to start clearing that huge mountain of debt and get out from under the burden of constantly paying interest.
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1 Federal Reserve Statistical Release, Z.1, Financial Accounts of the United States: https://www.federalreserve.gov/releases/z1/20180920/z1.pdf
2 Federal Reserve Statistical Release, H.6, Money Stock Measures: https://www.federalreserve.gov/releases/h6/20180927/h6.pdf