Welcome to today’s daily update for Thursday, August 20, 2026. Here’s everything you need to know.
The Breakdown
The United States’ national debt has just hit $40 trillion, doubling over the last decade. Let’s dive in.
A nation’s gross national debt is the amount of money that the government owes to public investors – like individuals or foreign countries – combined with the amount of money that the government has borrowed from itself.
Gross domestic product, or GDP, is a measure of the value of all goods and services produced in that country within a year. When combined with debt, this number produces a debt-to-GDP ratio.
This ratio compares a nation’s total debt to the value of the goods and services produced that year – typically, a value below 60% is highly safe. Values under 100% are manageable, but debt-to-GDP ratios past 100% can become risky in the long-term.
Prior to 2008, the US maintained a fantastic debt-to-GDP ratio, hovering around the safe threshold of 60%. However, the 2008 financial crisis sparked a massive surge in government bail-outs and spending while GDP dropped – this sent the ratio soaring to 100% by 2012, entering more concerning territory but remaining stable for some time.
Then, in 2020, the coronavirus pandemic hit – again, government spending continued, but a shuttered economy sparked a significant drop in GDP. The nation’s debt-to-GDP ratio soared to an all-time high of 132%, though it gradually fell to around 120% by 2024.
Now, a recent surge in the budget deficit under President Donald Trump – particularly due to the ongoing war in Iran and his administration’s tax cuts from last year – have caused the ratio to tick back up towards 125%.
Gross national debt of $40 trillion appears exorbitant when compared to that of other nations, but one must also take into account that the nominal GDP of the United States is almost $32.5 trillion.
Additionally, many have pointed out that such a large amount of debt is unhealthy, but not devastating. Japan and Greece, both of which have much smaller GDPs, remain economically stable despite having debt-to-GDP ratios of around 250% and 144%, respectively.
Bonds also play a role in this debt crisis. Government bonds represent debt that a nation owes to an individual, corporation, or foreign country, with more stable bonds usually corresponding with higher economic output, more currency stability, and a strong investor base. These individuals or nations can buy the debt of a particular country, purchasing a bond as a guarantee that the money will be returned after a fixed period of time – typically 10 to 30 years.
However, due to rising national debt, investors are becoming more and more nervous to even buy United States bonds. To convince these individuals to buy American bonds over bonds from other countries, interest rates on the bonds increase – meaning that investors receive more money from the government in return for their investment.
This week, the yield on the 30-year US Treasury bond skyrocketed to a two-decade high of 5.34%, revealing that the government is, in fact, being forced to raise interest rates due to a growing reluctancy to buy US bonds. However, this also means that the government is being forced to pay more than $3 billion per day in interest to investors – amounting to more than $1 trillion every year. This corresponds with the issuing of more bonds to cover the cost, increases the deficit, and compounds the debt – and the cycle repeats.
To solve this impending crisis, US Treasury Secretary Scott Bessent made a recent move to double the number of bond buybacks in the market. Essentially, the Treasury will step into the market and buy massive amounts of its own long-term bonds from investors. This artificially forces bond prices up due to the increase in investment, forcing yields to drop and therefore reducing the interest that the government must pay to new investors.
However, critics and market experts have pointed out that the move is simply a temporary solution to a worsening debt crisis – it may solve the problem for now, but bond yields will not remain low forever if the national debt continues to increase. The only way to permanently solve the problem is to decrease the budget deficit – the problem is, neither political party is willing to make their supporters unhappy by raising taxes or significantly cutting government spending.
The Global Snapshot
The latest in a recent uptick in Russian missile attacks killed at least 13 people in the Ukrainian capital of Kyiv yesterday night. Ukraine is extremely short on defense interceptors and is therefore using them sparingly – but Russia is taking advantage of that weakness. Citizens were forced to take shelter in basements and subway stations as ballistic missiles rained down. The attacks targeted a variety of buildings, including Red Cross centers, food warehouses, residential buildings, and hospitals. In recent months, Ukraine has stopped disclosing numbers regarding how many Russian missiles have been intercepted – according to the New York Times, less than a third of Russian missiles were taken down by Kyiv in July due to a lack of interceptors.
The Israeli military has confirmed that they will launch their first criminal investigation into reports of troop misconduct in Gaza, marking a significant step forward from the IDF’s previous inaction. However, out of more than 150 cases involving troop conduct – many of which saw the deaths of aid workers from the World Central Kitchen and other organizations – just five were chosen for review, as the rest were dismissed.
One of the selected cases involves the heartbreaking killing of Hind Rajab, a five-year-old Palestinian girl whose vehicle came under intense fire from Israeli forces. While the rest of her family did not survive, she remained on call with the Palestinian Red Cross for hours as she sheltered inside her vehicle, until she was also killed. The ambulance dispatched by the Red Cross was also bombed upon arrival, killing the two rescue workers sent to rescue Hind Rajab. The brutality of many of these incidents has sparked outrage from many rights groups and organizations, who argue that an investigation is unlikely to lead to any sort of conviction or action on Israel’s part.
Fact of the Day (The Fact Site): Around 15% of active Twitter accounts are social bots. This means there are nearly 48 million accounts that are not controlled by humans.
Quote of the Day (Gracious Quotes): Regarding the creative: never assume you’re the master, only the student. Your audience will determine if you’re masterful. (Don Roff)
Word of the Day (Merriam-Webster): Balmy (adj, BAH-mee) - Balmy is an adjective that is often used to describe weather that is warm, calm, and pleasant. It can also be used to describe someone or something (such as an idea) that is foolish or irrational.
In a Sentence: After a long, eight-hour drive, we were rewarded with a mild, balmy evening at our vacation spot on the shores of Lake Erie.
Image: Wikimedia Commons / Public Domain
Enjoyed this breakdown? Subscribe to help support our publication!