August 25, 2025
On Thursday's episode of the Peter Schiff Show, Peter (joined by a special guest, Schiff Sovereign's James Hickman) argues that the federal budget is no longer driven by programs so much as by the mounting costs of debt maintenance. The duo covers the headline $37 trillion public debt, how interest has become a mandatory line item that crowds out everything else, and why the Federal Reserve's interventions risk turning mounting deficits into accelerating inflation - all reasons, they say, to be ever-skeptical of fiat money.
James starts by laying out the raw numbers and why they matter for everyday policy decisions:
Look, I've been writing about this for a while. I've been talking about this for a while. The United States just recently hit $37 trillion in debt. And that's just the nominal public debt that doesn't include the unfunded liabilities and all the other things, the Social Security shortfall, the Medicare shortfall, all the other things-just the gross nominal public debt, $37 trillion. More importantly, the spending, the gross interest cost this fiscal year alone, which is going to end at the end of next month, September 30, 2025, is going to come in at about $1.2 trillion.
He pushes back on the familiar reassurance that "we owe it to ourselves" and explains who actually holds Treasury debt:
Now don't let people fool you. There's a Jedi mind trick that people play sometimes with the national debt and they go, "Oh, well, we owe it to ourselves," which is the biggest BS line ever that somebody could say about the US national debt. What they mean by that, when they say we owe it to ourselves, out of that $37 trillion there's a lot of that that's owed to foreign investors, you know, the Chinese and Japanese, and so forth. There's a lot of that that is owed to US banks, money market funds, some mutual funds, hedge funds, et cetera. And yeah, there is some of that that is owed to military retirement, to the Federal Reserve. Social Security trust funds own a lot of US government debt.
Interest and entitlements now claim nearly all tax revenue, leaving discretionary spending to be financed by new borrowing:
So the bottom line is they're spending $1.2 trillion this fiscal year that constitutes about 22% of all federal tax revenue. Every dollar they spend, 22 cents of that's going out the door just to pay interest on the national debt. Then they pay Social Security, then they pay Medicare and the other mandatory entitlement spending; basically the mandatory entitlements like Social Security, Medicare and interest on the debt last year consumed all of tax revenue. So everything else that's known as discretionary spending, which includes the military, Homeland Security, national parks, the light bill at the White House, all those things had to be funded with more debt.
In light of a bizarre recent Fed resignation and investigations into FOMC members, Peter speculates this is a politically-motivated attempt to pressure the Fed into easier money policy:
Obviously if they found that this voting Fed member- the FOMC- committed mortgage fraud- it was because they were investigating the people on the FOMC trying to find dirt on them!... The two that voted to cut rates last time are probably fine. They're not looking at those guys. So all the Fed officials that didn't vote to cut rates- I bet the IRS is looking over all their tax returns, you know, you've got FHA looking over all their mortgage applications.... How do I get off of the naughty list on to the nice list? I'm voting in September for a rate cut.
Peter concludes that the goal here, as always, is to unleash the money printer for political purposes:
The counterbalance to aggressive deficit spending is, well, interest rates could go up and undermine what I'm trying to do. But if you know that, "No I don't have to worry about these big deficits pushing up interest rates because we control the central bank, and we're just going to print money and buy up all the bonds we're selling," now you've basically turned over the press to the government, and now they're going to just use it, just like in Zimbabwe.
This article was originally published on SchiffGold.com.