The Debt Black Hole -

In space, a black hole affects everything close to it.
In an economy, a debt black hole affects everything close to it.
We currently have a massive debt black hole in our midst.
In this episode of the Midweek Memo podcast, host Mike Maharrey reveals the size of this debt black hole, explains how it got here, and highlights the potential impacts on the economy and your money. 
Mike opens the show reminiscing about his childhood love of space.
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<blockquote>
"Black holes are one of the wildest phenomena in the universe. In simplest terms, a black hole is a lot of mass crammed into a tiny space. Its gravity is so strong that not even light can escape once it gets too close. Imagine compressing the sun into a ball just a few miles across without changing its mass. It’s like that. Because light can’t escape, you can’t actually see a black hole. We know it exists due to the way it affects things around it. Because of its profound gravitational pull, once an object gets too close, it will be sucked in. There is no escape. Greg Weldon is a fantastic financial analyst whom I have interviewed several times. He argues that we’re living in a world with a debt black hole. The debt load is so massive that it is sucking everything into the economy into it. And the black hole is getting progressively stronger."
</blockquote>
Mike starts with an overview of the massive national debt. 
<blockquote>
"When we talk about debt, the first thing that comes to mind is the massive national debt. Last month, it eclipsed $38 trillion. And it is growing at an exponential rate. In 2020, the Congressional Budget Office (CBO) projected that the debt wouldn’t hit $37 trillion until 2030. Oops. Get this: US public debt has grown by 64.6 percent in the last 6 years."
</blockquote>
Mike emphasizes that this is the result of a spending problem that isn't going away because the political incentives drive borrowing and spending. 
He also points out that tariffs aren't going to fill the gap.
<blockquote>
"I mean, it would be great. Getting $2,000 tariff rebates would be great, too, but it’s all political theater.  They’ve also floated the idea of replacing the income tax with tariffs. That would be pretty awesome as well. Unfortunately, the math doesn’t work, and math doesn’t care about political agendas."
</blockquote>
Mike runs through the numbers and shows that tariff revenue won't even close the budget deficit, much less pay down the debt. 
<blockquote>
"The reality is you can't solve a spending problem without cutting spending. All of this other stuff is wishful thinking."
</blockquote>
Mike then points out that the debt black hole isn't just made up of government debt.
<blockquote>
"American households were buried under a record $18.59 trillion in debt — trillion with a 'T.' A lot of that is mortgage debt, but factoring that out, Americans are still carrying $5.08 trillion in consumer debt. That’s up nearly a trillion dollars since 2020."
</blockquote>
Mike highlights another concerning trend – credit card spending is slowing down. 
<blockquote>
"Americans paid down their debt during the pandemic using stimulus money. It didn’t hurt that everybody was locked in their house and not spending as much. But as the inevitable post-pandemic inflation burned through the economy, people blew through their savings and turned to Visa and Mastercard to make ends meet. Now there’s an even bigger problem. It appears the credit cards may be maxing out. The growth of revolving debt, primarily reflecting credit card balances, has been slowing all year."
</blockquote>
This is bad news for an economy that depends on consumer spending to keep limping along.
High debt levels are driving high levels of consumer stress. 
<blockquote>
"LegalShield’s Consumer Stress Index increased by 3 points in the third quarter and was at the highest level since March 2020, when the economy was shut down during the pandemic. The source of this stress? Debt!"
</blockquote>
Mike provides some data on delinquencies to underscore the point. 
<blockquote>
"The bottom line is people are having a hard time keeping their heads above water – much less saving anything. That doesn’t bode well for the economy of the future because capital expenditures flow from savings. Without capital expenditures, businesses can’t grow. So, all they can do is keep artificially suppressing interest rates, hoping people will keep digging the debt hole deeper."
</blockquote>
And then there is corporate debt. It is also at record levels. We're seeing the impact in an increasing number of corporate bankruptcies. 
<blockquote>
"Corporate bankruptcies hit a 14-year high in 2024, and the pace continued through the first seven months of 2025. Through the first seven months of this year, 446 companies filed for bankruptcy. That was the most for any 7-month period since 2010, in the midst of the Great Recession."
</blockquote>
Now you can see why Greg Weldon dubbed this a "debt black hole."
So, how did we get here?
<blockquote>
"Well, the Federal Reserve incentivized the debt with nearly two decades of easy money. It kept interest rates at zero for seven years. By 2018, the central bank only managed to push rates back to 2.5 percent. The next year, they started cutting again. And then we had the pandemic, which gave them an excuse to go to zero again. They didn’t aggressively start raising rates until March 2022, when they could no longer convince everybody that inflation was transitory."
</blockquote>
Mike says that when we understand the scope of the debt black hole, a lot of things that don't make sense on the surface come into focus. 
<blockquote>
"For instance, why would a central bank cut interest rates with the CPI still at 3 percent? Because there is a debt black hole, and the economy can’t function in a normal interest rate environment. We need more easy money to keep the air in the economic bubbles blown up by stimulus. But more easy money has another effect. It makes the debt black hole that much bigger."
</blockquote>
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When you boil it all down, the bottom line is the only way to deal with a debt black hole is to do more of what created it in the first place!
<blockquote>
"The tl/dr is we’re talking about more inflation."
</blockquote>
Mike reminds listeners of <a href="https://www.moneymetals.com/news/2025/01/12/trump-vs-powell-and-a-catch-22-003748" rel="noreferrer">the Catch-22 facing the Fed</a> that he's been harping on for months.
<blockquote>
"It needs to hold rates higher longer, and I would argue even raise rates, to deal with inflation. But it also needs to cut rates because an economy in proximity to a debt black hole can’t function with a normal rate. The Fed has made its choice. It picked inflation. This isn’t a policy you can protest and vote away. This is reality."
</blockquote>
There is no solution to the problem. All we can do is try to shield ourselves from the dastardly effects, including the relentless devaluation of the dollar. Mike says this is why he keeps urging people to save in real money – gold and silver. 
He closes the show with a call to action – call 800-800-1865 and talk to a Money Metals' precious metals specialist today.
<h2>Articles Mentioned in the Show</h2>
<a href="https://www.moneymetals.com/news/2025/09/09/what-does-greg-weldons-debt-black-hole-mean-for-gold-silver-004327" rel="noreferrer">What Does Greg Weldon's Debt Black Hole Mean for Gold and Silver?</a> (Link to his report in the article.)
<a href="https://www.moneymetals.com/news/2025/10/23/in-the-blink-of-an-eye-the-national-debt-exceeds-38-trillion-004434" rel="noreferrer">In the Blink of an Eye, the National Debt Exceeds $38 Trillion</a>
<a href="https://www.moneymetals.com/news/2025/11/11/slowing-credit-card-spending-likely-reflects-growing-consumer-debt-stress-004472" rel="noreferrer">Slowing Credit Card Spending Likely Reflects Growing Consumer Debt Stress</a>
<a href="https://www.moneymetals.com/programs/monthly-program" rel="noreferrer">Money Metals Monthly Purchase Plan</a>

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