Mirror Review
October 23, 2025
The United States recently crossed $38 trillion in national debt, the highest in its history. Yet, the U.S. remains the world’s most powerful and stable economy.
So how does the U.S. sustain its superpower status despite carrying such a massive debt load?
America isn’t a superpower despite its $38 trillion US debt. It’s a superpower because its system allows it to thrive with that debt.
In other words, America’s dominance doesn’t crumble under its debt load; it actually uses that debt as a smart asset to sustain global influence.
1. Global Dominance of the US Dollar
The foundation of U.S. power begins with its currency.
- The U.S. dollar is the world’s reserve currency, used in about 90% of all international transactions.
- Oil, gold, tech exports, and even debt repayments between other countries are priced in dollars. Nearly 60% of global foreign exchange reserves are held in U.S. currency.
- This gives America what economists call an “exorbitant privilege”. It’s the ability to borrow in its own currency at low interest rates.
- Therefore, countries, corporations, and investors globally buy U.S. Treasury bonds to store value and stabilize their economies.
In effect, the world funds America’s debt because it needs access to the U.S. dollar system. Every time the U.S. borrows more, global demand for its bonds rises, not falls.
2. U.S. Treasuries Are The World’s Safest Investment
Even in times of global turmoil, investors rush to buy U.S. government bonds, not sell them.
During the 2008 financial crisis, the COVID-19 pandemic, and even recent geopolitical tensions, capital flowed into US debt as a safe haven. No other country enjoys this kind of trust.
As of 2025, foreign investors hold roughly $8 trillion in U.S. debt, led by Japan and China. These nations rely on the dollar’s stability to safeguard their reserves.
Because of this trust, the U.S. government can borrow money cheaply and continuously, allowing it to fund wars, innovation, and infrastructure without fear of default.
3. America Uses Debt as a Growth Engine
Unlike most nations, the U.S. uses debt as a strategic tool for growth.
Instead of simply covering deficits, it invests borrowed money into programs that generate long-term economic power, like defense, technology, education, and infrastructure.
For example:
- The U.S. spends around $850 billion annually on defense, supporting global military dominance and advanced defense tech industries.
- Federal funding powers research at universities like MIT and Stanford, which in turn feed Silicon Valley’s innovation ecosystem.
- Infrastructure and clean energy programs create jobs and attract private investment.
Hence, the $30 trillion worth U.S. economy continues to grow because it reinvests borrowed money into sectors that produce value, not just consumption.
4. U.S. Spending Never Stops
The US debt accumulates not from waste alone, but from policy choices tied to its social contract.
Key drivers include:
- Entitlement programs like Social Security and Medicare serve an aging population of 65 million.
- Defense spending maintaining global security commitments.
- Crisis responses, from the 2008 bailout to the $5 trillion COVID stimulus.
- Tax cuts, especially the 2017 Tax Cuts and Jobs Act, which reduced federal revenue by an estimated $1.5 trillion over a decade.
Each of these moves expanded the deficit, but also supported the country’s economic base and consumer demand, which fuels global trade and corporate growth.
5. The U.S. Economy Still Leads the World
Despite its det, the U.S. accounts for roughly 25% of global GDP.
Companies like OpenAI, Apple, Microsoft, Amazon, Google, and Tesla collectively generate trillions in market value and dominate international markets.
Moreover, the U.S. remains the world’s largest consumer market, importing over $3 trillion in goods and services annually. That demand sustains economies from China and Mexico to Germany and South Korea.
In other words, when Americans spend, the economies of the world grow. This is another reason global investors support U.S. stability, even with high debt.
6. Military and Geopolitical Leverage
America’s military power is another pillar of economic security.
With over 700 bases across 80+ countries, the U.S. ensures stability in trade routes, energy corridors, and global supply chains.
This defense umbrella is backed by an annual defense budget larger than the next 10 countries combined. This allows global commerce to function smoothly under US-led security.
That stability reinforces investor confidence in the dollar and U.S. debt, completing a self-reinforcing cycle:
- Economic power funds military dominance
- Military dominance ensures global trade
- Global trade sustains US debt credibility.
7. Innovation and Productivity Offset the Debt Burden
The U.S. consistently leads the world in technological breakthroughs, which drive productivity and long-term growth.
- Many global venture capital investments flow into American startups.
- The country leads in AI, semiconductors, biotech, and clean energy.
- Its universities produce more patents and Nobel laureates than any other nation.
As productivity rises, so does GDP, which makes the debt-to-GDP ratio sustainable in the long run.
That’s why investors focus less on the debt figure itself and more on America’s ability to keep growing.
8. The Global Trust Advantage
Perhaps the strongest reason the U.S. sustains its dominance is trust.
The world trusts that the U.S. will always repay its debts, because it borrows in a currency it alone controls.
While other nations risk running out of foreign reserves, the U.S. can issue dollars to meet obligations. This is a privilege no other country possesses on such a scale!
As a result, even with rising interest costs (now approaching $1 trillion per year), investors keep buying U.S. bonds. No other economy offers that mix of liquidity, scale, and credibility.
Why the Latest Government Shutdown Adds to US Debt?
The recent government shutdown has put fresh pressure on U.S. finances and is contributing to the climb in national debt.
- According to the Council of Economic Advisers, each week of the shutdown could reduce U.S. GDP by about $15 billion, as federal employees are furloughed and consumer spending slows.
- While some spending is paused, delayed revenue collection and additional costs, such as hazard pay and emergency operations, increase the government’s borrowing needs. This has helped push the total U.S. debt past $38 trillion.
- Credit-rating agency Scope Ratings has warned that the shutdown poses “negative credit rating” implications for the U.S., warning this could raise borrowing costs and make managing debt-to-GDP levels more challenging.
In short, the shutdown adds a short-term layer of risk to the long-term debt picture.
The Big Picture: The US Debt as Power, Not Weakness
America sustains its superpower status because it controls the system that finances its debt.
It’s the price of being the world’s banker, consumer, and security provider all at once.
It issues the world’s money, owns the key industries of the future, and invests its borrowings into innovation and security that benefit the entire global economy.
Until another nation can offer a comparable financial system, technological base, and military umbrella, the U.S. dollar and the debt behind it will remain the foundation of global finance.
In conclusion, debt is not America’s weakness — it’s the engine that powers its global dominance.
