The debt “black hole”: Why easy money keeps pulling the economy in

In this episode of the Money Metals Midweek Memo, host Mike Maharrey leans on Greg Weldon’s “debt black hole” metaphor to explain how towering obligations now warp policy, markets, and household finances.

The lens is simple and unsettling: when the mass of debt grows large enough, it distorts everything around it, and escaping the pull requires doing more of what created it in the first place.

Public debt eclipsed $38 trillion last month, rising 64.6% in just six years and arriving years ahead of the Congressional Budget Office’s 2020 projection that $37 trillion wouldn’t appear until 2030. 

Washington still spent roughly $7 trillion in fiscal year 2025, a 4.1% increase from the prior year, with September alone registering $446 billion in outlays even as calendar effects made it the lightest month.

Against that scale, tariff math collapses. Fiscal 2025 brought in about $22 billion from tariffs, up 42% year over year, with September’s $30 billion reflecting the post–“Liberation Day” surge. 

Even a generous annualized run-rate of $400–$500 billion barely covers one month of federal spending and could fade if “negotiated” deals lower rates. The deficit still ran about $1.8 trillion, and interest costs crossed $1 trillion, now the second-largest budget item.

Politics, incentives, and why cuts don’t come

Maharrey notes that every president since Grover Cleveland has left office with more debt than he inherited. Incentives favor spending because programs buy votes while cuts assign blame. 

Only about 27% of the budget is truly discretionary; the rest is bound up in mandatory programs and interest payments that are politically or mechanically difficult to trim. Tariff rebates sound appealing on social media, but the arithmetic shows they require more borrowing and serve mostly as theater.

The conclusion is blunt. You cannot solve a spending problem without cutting spending. Without confronting Social Security, Medicare, national defense, and the ever-rising interest tab, the gravitational mass of the debt black hole continues to increase, pulling policy choices along with it.

Households at the edge

American households are also stretched. Total household debt stands at a record $18.59 trillion. Even setting mortgages aside, consumer balances sit near $5.08 trillion, almost $1 trillion higher than in 2020. 

The cheap-money era and pandemic stimulus briefly reduced balances and boosted savings, but post-pandemic price inflation chewed through cash cushions and pushed families onto Visa and Mastercard.

The card channel is now strained. 

The average APR sits near 19.98%, with many accounts charging 26% to 28%, only a touch below the record 20.79% average set recently. 

Revolving credit growth slowed throughout the year, contracted in May and June, fell 5.5% in August, and barely grew in September—signals that cards are maxing out and borrowers are wary. 

LegalShield’s Consumer Stress Index rose three points in the third quarter, up 8.2% in 2025 and now the highest since March 2020. 

The New York Fed reports 4.5% of all debt is somewhere in delinquency and a 3.03% flow into serious delinquency, up from 1.68% a year earlier, with VantageScore noting a 47% jump in late payments even among prime borrowers.

Corporate cracks

Corporate balance sheets aren’t immune. 

2024 produced a 14-year high in bankruptcies, and the first seven months of 2025 saw 446 corporate filings—the most for any comparable span since 2010 in the wake of the Great Recession. 

When rates rise even modestly from an abnormally low base, debt-service costs expose weak cash flows and over-extended capital structures.

The picture that emerges is comprehensive. Government, households, and corporations all contribute to the mass of the black hole, and each reacts to the pull in ways that reinforce it—more borrowing to bridge gaps, more policy contortions to avoid short-term pain, and less resilience when shocks arrive.

The policy trap

Maharrey traces the origin of the trap to nearly 15 years of engineered cheap money. 

After 2008, the Federal Reserve held rates at zero for seven years, only reaching 2.5% by 2018 before cutting three times in 2019 and returning to zero in 2020. 

Hikes didn’t begin until March 2022, when “transitory” inflation claims finally collapsed. 

An entire professional cohort has grown up believing zero to two percent is normal, which explains the political and market pressure to ease whenever the economy wobbles.

That pressure persists even with CPI hovering near 3%, still a full percentage point above the official target. The debt-saturated system strains under “normal” rates, so the impulse is to cut policy rates, halt balance-sheet reduction, and tip back toward quantitative easing. Each step supports activity in the short run while simultaneously weakening the currency and inflating new bubbles. 

As Weldon frames it, escaping the pull requires more thrust—printing, monetizing, debasing—that only increases the mass.

By the numbers, without the window dressing

The government spent about $7 trillion in fiscal 2025 and ran a deficit near $1.8 trillion. 

Tariff revenue around $22 billion for the year, and an optimistic $400–$500 billion annual run-rate, does not change the math when September alone cost $446 billion. 

Interest on the national debt exceeded $1 trillion. 

Households carry $18.59 trillion in total debt, with $5.08 trillion in consumer balances and card APRs around 19.98%, while serious delinquencies climbed to a 3.03% flow from 1.68% a year ago. 

Corporate bankruptcies hit 446 in the first seven months of 2025, the most since 2010, after a 14-year high in 2024. 

CPI near 3% meets easing tendencies anyway, because the alternative threatens a system whose growth already requires more than $1 in new debt for each $1 of GDP.

Numbers tell a consistent story. Incomes adjusted for inflation are roughly flat compared with five years ago, according to JPMorgan, which means many workers are losing ground even with nominal raises. 

In a fiat system where two percent devaluation “on a good day” is policy, purchasing power erosion is not a bug; it is the plan.

What it means for Gold and Silver

Maharrey’s conclusion follows from the trap. 

If rates stay high, the burden of interest costs threatens growth and solvency across sectors. If rates fall and the balance sheet expands, the currency weakens and purchasing power erodes. 

Either path is supportive of sound money, precious metals that carry no counterparty risk, and historically perform as policy turns back toward stimulus.

For savers who feel squeezed, he points to a practical path: an installment approach starting around $100 a month that accumulates fractional positions into full ounces over time. 

When lump-sum buying is hard and inflation is persistent, systematic accumulation offers a way to hedge without overreaching.

Closing notes and next steps

Maharrey invites listeners to read Greg Weldon’s debt black hole report, packed with charts that deepen the analysis. He also flags the Friday Market Wrap and an upcoming conversation with analyst Michael Pinto. 

The thrust of the episode remains clear. In a world pulled by a growing debt singularity, policymakers will keep reaching for the same tools, and those tools will keep weakening cash. 

To receive free commentary and analysis on the gold and silver markets, click here to be added to the Money Metals news service.