5 Quadrillion Won Debt: The 5 Real Reasons Behind the U.S. National Debt

A Chronicle of Massive Debt Forged by Decades of Decisions, Historic Events, and the Dollar’s Privilege

• The historical background of the U.S. strategically using debt since its founding
• The structural mismatch of rising spending and declining revenue in U.S. finances
• Three decisive crises in the 21st century that explosively increased national debt
• The secret weapon called the “dollar” that allows only the U.S. to bear massive debt

The staggering figure of 5 quadrillion won, or 37 trillion dollars, is the total amount of the U.S. national debt the government carries today. This is not just an accounting record but the result of countless decisions and historic events over decades, combined with a unique privilege held only by the U.S.

This article is not a simple audit but a journey to answer the fundamental question “Why did it come to this?” like a detective story. We will peel back layers of history, politics, and economics to uncover the real reasons.

1. The Beginning of Debt: From Founding Principles to Modern Habits

The story of U.S. debt starts not from mistakes but from an intentional nation-building strategy. In 1791, the first Treasury Secretary Alexander Hamilton consolidated $75.4 million of debt from the Revolutionary War instead of eliminating it, using it to establish the new nation’s creditworthiness.

First Treasury Secretary Alexander Hamilton used national debt as a tool to build credit.

This gamble was brilliantly successful, embedding the idea that debt is not evil but a useful tool for the nation into America’s DNA. Historically, the U.S. maintained a rhythm of borrowing during crises like wars and repaying during peace. However, since the 1980s, debt surged even in peacetime, breaking this historical rhythm. The problem was not the debt itself but the emergence of uncontrollable, permanent debt.

2. Structural Rift: Spending More, Collecting Less

At the core of the U.S. national debt lies a fundamental conflict between government promises on spending and the revenue collected through taxes.

The unstoppable spending train: Mandatory spending

A key issue in the federal budget is “mandatory spending” that occurs automatically by law, especially Social Security and Medicare. Due to an aging population and soaring healthcare costs, these two programs have become the largest drivers of federal spending and are politically “sacred cows,” exerting strong upward pressure on expenditures.

U.S. government spending (blue line) consistently exceeds revenue (red line), creating a structural fiscal deficit.

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Shrinking revenue base: The era of tax cuts

While spending automatically increased, the revenue base was deliberately reduced. Since the 1980s, “supply-side economics” gained traction, claiming that lowering tax rates on corporations and the wealthy would stimulate economic growth and increase tax revenue. This led to large tax cuts under the Bush administrations (2001, 2003) and the Trump administration (2017).

However, the claim that “tax cuts pay for themselves” did not materialize, causing significant declines in Treasury revenue and creating a structural fiscal deficit.

Summary of the U.S. Federal Budget (Fiscal Year 2024)

3. Catalysts for Debt Surge: Three Major Crises

The structural deficit smoldered quietly until three major crises in the 21st century poured fuel on the fire.

First shock: The “War on Terror”

The costs of the Afghanistan and Iraq wars, initiated after the 9/11 attacks, were handled through “emergency supplemental budgets” rather than the regular budget, creating a “ghost budget” that obscured actual costs. The total cost, including future veterans’ healthcare, is estimated to reach up to $6 trillion.

Second shock: The 2008 Financial Collapse

Bailouts and stimulus measures to prevent financial system collapse caused the national debt to surge by $6.1 trillion between 2008 and 2012.

During the 2008 financial crisis and the COVID-19 pandemic, the U.S. debt-to-GDP ratio rose almost vertically.

Third shock: The COVID-19 Pandemic

Nearly $5 trillion in historic relief funds were released to combat the pandemic, pushing the debt-to-GDP ratio to an all-time high of 132.8% in Q2 2020.

These crises created a “ratchet effect,” permanently raising debt levels even after the crises passed.

Cost of Crises: Debt Impact of Major 21st Century Events

4. Secret Weapon: How the Dollar Enables Debt Sustainability

How has the U.S. managed to bear such massive debt without facing hyperinflation or default, as other countries might?

The answer lies in the absurd privilege of the U.S. dollar as the world’s reserve currency. Because the world needs dollars for trade and foreign exchange reserves, demand for U.S. Treasury securities never dries up. This allows the U.S. to borrow at lower interest rates than any other country, effectively having the world subsidize its deficit spending.

Japan also has one of the highest debt-to-GDP ratios globally, but most of its debt is held domestically, providing stability. In contrast, the U.S. debt is uniquely supported worldwide. Without this privilege, the fiscal policies of the past 40 years would have been impossible.

The dollar’s status as the global reserve currency is a key factor enabling the U.S. to sustain massive debt.

5. The Never-Ending Game: Why Politics Fuels Debt Growth

With such clear numbers, why don’t politicians solve the problem? It’s not a lack of knowledge but a lack of political will and incentives prioritizing short-term gains.

Republicans have used deficit spending to fund tax cuts, while Democrats have used it to expand social programs. Politicians provide immediate benefits like tax cuts or new welfare to voters, shifting the cost (debt increase) onto future generations—a “fiscal illusion.” I often feel regret seeing politicians prioritize short-term election wins over long-term fiscal health.

Ultimately, the U.S. national debt is not just an economic issue but the accumulated result of a system that prioritizes short-term political gain over long-term stability.

Conclusion

The “real reasons” behind the U.S. national debt of 5 quadrillion won are not a single cause but a combination of factors. To summarize:

• Structural flaws: Mandatory spending like Social Security surges while repeated tax cuts shrink revenue, creating fundamental mismatch.
• Three crises: The 21st-century “War on Terror,” financial crisis, and pandemic were decisive events that permanently raised debt levels.
• Unique privilege: The dollar’s status as the global reserve currency allowed the U.S. to borrow indefinitely at low cost, delaying problem resolution.

The Congressional Budget Office (CBO) warns that public debt, currently about 100% of GDP, could rise to 156% by 2055. The final chapter of this story is yet unwritten. Its outcome will depend on whether the U.S. can confront the consequences of past choices before it’s too late.