Remember Elon Musk’s warning that America will ‘1,000%’ go bankrupt? Well, US debt just soared through $40T

U.S. national debt officially surpassed the $40 trillion mark, a record-breaking figure more than double its level in 2017. The debt increase is attributed to various factors including pandemic relief, persistent deficits, and the rising cost of servicing existing debt. While crossing a significant financial threshold does not automatically lead to bankruptcy, the speed and scale of the debt accumulation have reignited concerns raised by tech mogul Elon Musk.

Musk had previously warned that America would "1,000%" go bankrupt if advancements in AI and robotics were not made to support the economy. The Congressional Budget Office projects that federal net interest costs will reach $1.0 trillion in 2026 and climb to $2.1 trillion by 2036. This escalating debt has the potential to weaken the value of the U.S. dollar, as older, cheaper debt is refinanced at higher interest rates, prompting the government to borrow more to cover mounting interest payments.

Though the U.S. government is unlikely to default on its debt and declare bankruptcy, the depreciation of the dollar's value could negatively impact American households. Renowned economist Ray Dalio has cautioned that the U.S. may face a "debt death spiral" wherein the government must borrow solely to pay interest, leading to a vicious cycle of self-reinforcing debt. Although a formal default is not expected, the dollar's diminishing purchasing power may still pose a threat to the average American.