The United States $1 Trillion Interest Problem
"Wealthy" nations are not immune to the crushing effects of debt. According to Federal Reserve Economic Data, the cost of making interest payments on the country’s national debt has now exceeded $1 trillion1.
This staggering interest burden doesn’t contribute to any productive investment; it simply drains resources from other essential areas. The U.S., like many nations, is caught in a vicious cycle where debt continues to grow, and interest payments siphon off an increasing share of government revenues. To really highlight this problem at a basic level, according to some commentators, the United States is currently paying $3 billion a day in interest2.
Total US debt now exceeds $35 Trillion. As interest payments continue to destroy the country’s ability to pay down its debts, the economy's overall debt continues to rise at an alarming pace, worsened by the $1.5 trillion deficit3.
In recent years, the U.S. has faced multiple "fiscal cliffs," where Congress has had to negotiate debt ceiling increases to avoid defaulting on its obligations. These fiscal cliffs—triggered by runaway borrowing and an inability to cut spending—highlight how unsustainable the country’s debt trajectory has become. These cliffs represent moments of economic peril, where failure to act could plunge the U.S. into a financial crisis, damaging its credit rating and causing ripple effects across the global economy.
The US is very well known for its defense budget, having the worlds largest4. However, The Congressional Budget Office confirmed their expectations that the country will now be spending more on interest payments than on national defense5. This shifting budget priority means that less money is available for sectors that directly impact citizens’ lives.
The consequences are stark: having less to spend on vital sectors like infrastructure, education, and social security disproportionately affects the poor, who rely on these public services far more than the wealthy. As funds for public education, affordable housing, and welfare programs dwindle, the wealth gap widens. The poor face crumbling infrastructure, underfunded schools, and a lack of social safety nets, while the rich remain largely insulated from these effects by private schools, healthcare, and gated communities.
As the government is forced to service interest over public investment, it leaves the most vulnerable in society paying the highest price. The current trajectory is unsustainable, and without systemic change, the debt crisis will only deepen, further widening the wealth gap and weakening the nation’s economic resilience.
Whilst interest arguably fuels growth, this blog highlights the true cost of this ‘growth’ on society. We believe a growing economy should benefit all those in society, not only a select few.
When we make choices about interest in consuming or benefitting from it, we are directly and indirectly contributing to a world with real consequences.
Wahed’s vision is to create a world free from interest. We believe that growth should come from real economic activity, and wealth should be built sustainably, from investing in real assets. We believe by providing professional grade investments that are always free from interest, we aim to create long-term wealth for our clients without sacrificing their faith and values.
Join the 400,000 strong community that believes in this vision too and become an investor with Wahed today.
Sources
- https://fred.stlouisfed.org/series/A091RC1Q027SBEA
- https://fortune.com/2024/09/07/us-debt-crisis-daily-interest-expense-3-billion-fed-rate-cuts/
- https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/
- https://worldpopulationreview.com/country-rankings/military-spending-by-country
- https://www.forbes.com/sites/theapothecary/2024/02/07/cbo-federal-interest-payments-now-exceed-defense-spending/
Risk Warning: Equity investments are not readily realisable and involve risks, including loss of capital, illiquidity, lack of dividends and dilution, and it should be done only as part of a diversified portfolio. Investments of this type are only for investors who understand these risks. You will only be able to invest in the company once you have met our conditions for becoming a registered member.
Please visit www.wahed.com/uk/ventures/risk for our full risk warning.
Risk Warning: As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. The tax treatment of your investment will depend on your individual circumstances and may change in the future. If you are unsure about whether investing is right for you, please seek expert financial advice.
Please visit www.wahed.com for our full terms and conditions
Maydan Capital Limited, trading as WahedX, is registered in England and Wales (Company No. 13451691), registered office: 87-89 Baker Street, London, W1U 6RJ, UK. Maydan Capital Ltd (FRN: 963613) is an appointed representative of Wahed Invest Ltd (FRN: 833225), an authorised and regulated firm by the Financial Conduct Authority.Wahed Invest Ltd. is registered in England and Wales (Company No. 10829012), registered office: 87-89 Baker Street, London, W1U 6RJ, UK and is authorised and regulated by the Financial Conduct Authority: FRN 833225.
Subscribe For More Islamic Finance Content
As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. The tax treatment of your investment will depend on your individual circumstances and may change in the future. If you are unsure about whether investing is right for you, please seek expert financial advice.
Wahed Invest LLC (Wahed) is a US Securities and Exchange Commission (SEC) registered investment advisor. Wahed Invest provides brokerage services to its clients through its brokerage partner Apex Clearing Corporation, a member of NYSE - FINRA - SIPC and regulated by the SEC and the Commodity Futures Trading Commission. Registration does not imply a certain level of skill or training. Wahed does not intend to offer or solicit anyone to buy or sell securities in jurisdictions where Wahed is not registered or a region where an investment practice like this would be contrary to the laws or regulations. Any returns generated in the past do not guarantee future returns. All securities involve some risk and may result in loss. Any performance displayed in the advertisements or graphics on this site are for illustrative performances only.
Disclaimer: Wahed Technologies Sdn Bhd ("Wahed") is a Digital Investment Manager (DIM) licensee issued by Securities Commission Malaysia (eCMSL/ A0359/2019). It is part of Wahed Inc. Wahed is authorized to conduct a fund management business that incorporates innovative technologies into automated portfolio management services offered to clients under a license issued pursuant to Schedule 2 of the Capital Markets Services Act 2007. All investments involve risks, including the possibility of losing the money you invest, and the track record does not guarantee future performance. The history of returns, expected returns, and probability projections is provided for informational and illustrative purposes, and may not reflect actual future performance. Wahed is not responsible for liability for your trading and investment decisions. It should not be assumed that the methods, techniques, or indicators presented in this product will be profitable, or will not result in losses. The previous results of any trading system published by Wahed, through the Website or otherwise, do not indicate future returns by that system, and do not indicate future returns that will be realized by you.
Wahed Invest Limited is regulated by ADGM’s Financial Services Regulatory Authority (“FSRA”) as an Islamic Financial Business with Financial Services Permission for Shari’a Compliant Regulated Activities of Managing Assets and Arranging Custody [Financial Permission No. 220065]. Our ADGM Registered No. is 000004971. Wahed Invest Limited utilises Abu Dhabi Commercial Bank as its banking partner/custodian
Wahed assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. Any strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. Furthermore, the information presented may not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance.
There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services and should seek advice from an independent advisor before acting on any information presented. Any links to third-party websites are provided strictly as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites nor do we endorse the content and information contained on those sites. When you access one of these websites, you are leaving our website and assume total responsibility and risk for your use of the third-party websites.
