National Debt and Bitcoin: Why Bitcoin Benefits from the Debt Burden

Short answer: National debt and bitcoin are linked by the question of how states carry their debt. Large mountains of debt are almost never repaid. They shrink because prices and wages rise faster than interest rates. In the process, savings in euros, francs and dollars lose purchasing power. Bitcoin has a fixed supply and is nobody's debt. That is why it benefits in the long run.

The US has more than $40 trillion of debt, and almost $7 billion is added every day. Germany loosened its debt brake in 2025, and its interest costs have more than doubled since 2021. You may be wondering who will ever pay for this and what it does to your savings. Using official figures, this article shows how states get rid of debt in practice, why that hits savers and where bitcoin fits into the picture. And where it doesn't.

How high is national debt?

National debt is all the loans and bonds taken on by the federal government, states, municipalities and social security funds. Because a trillion on its own says little, it is put in relation to a year's economic output, the gross domestic product (GDP). That is the debt ratio.

Source: IMF World Economic Outlook, October 2026 (general government gross debt in % of GDP).

In absolute numbers:

• USA: $40.58 trillion (federal debt on Nov 10, 2026). In January 2013 it was $16.43 trillion, in January 2000 $5.75 trillion.
• Germany: €2’846 billion at the end of 2025, after €2’502 billion at the end of 2021.
• Austria: €418 billion at the end of 2025, after €335 billion at the end of 2021.

Switzerland is the exception. A debt brake has applied there since 2003, approved by about 85% of voters in 2001. Its debt ratio has fallen from 52% to 40% since 2000. Germany, on the other hand, loosened its debt brake in March 2025: defence spending above 1% of GDP no longer counts, and a €500 billion special fund for infrastructure has been added. The IMF therefore expects the German ratio to rise to 74% by 2030.

The real problem: interest

As long as interest rates were at zero, new debt cost almost nothing. Since central banks raised rates sharply in 2022 and 2023, states have had to replace old, cheap bonds bit by bit with new, expensive ones. The interest bill rises year after year, even without new debt.

Sources: US Treasury (Fiscal Data: Interest Expense, Monthly Treasury Statement), Eurostat (gov_10dd_edpt1).

So of every dollar of taxes in the US, about 20 cents go to creditors. At the same time, the federal government spent about $1’990 billion more than it took in during fiscal year 2026. Part of the new debt now serves only to pay the interest on the old.

How states get rid of debt

A state has four ways to lower a high debt ratio:

1. Austerity: more taxes, less spending. Politically hard and rarely sustained over many years.
2. Growth: the economy grows faster than the debt. Difficult in ageing societies in Europe and Japan.
3. Default: the state doesn't repay, or only partly, as Greece did in 2012. For states with their own central bank, the last resort.
4. Inflation and low interest rates: prices rise faster than interest rates. The debt stays the same in euros but becomes smaller relative to the economy.

The fourth way is the quietest and historically the most common. After the Second World War, US debt stood at 106% of GDP. By the mid-1970s the ratio had fallen below 25%, without the debt being repaid in dollars. Economists Carmen Reinhart and Belen Sbrancia calculated that in the US and the UK, debt averaging 3 to 4% of GDP was liquidated every year through negative real interest rates. They call this financial repression: interest rates are held below the inflation rate, and savers pay the difference. Why the state is among the first to receive new money and savers among the last is explained by the Cantillon effect.

How this just happened in Germany

The same pattern has played out in the German-speaking countries in recent years. Germany has taken on about €344 billion of new debt since the end of 2021, and yet its debt ratio has fallen from 67.4% to 62.8%.

How inflation eats your savings over longer periods and which ways of saving help against it is shown in the pillar article Inflation and loss of purchasing power. How the money for it comes into being in the first place is explained in The fiat money system explained simply.

National debt and bitcoin: why bitcoin benefits

If the quietest way out of debt leads through inflation and low interest rates, everyone who saves in money a state can influence loses. Bitcoin benefits from this in three ways.

1. Bitcoin can't be diluted

A state can make its debt smaller through more money and higher prices. With bitcoin that doesn't work: the supply is capped at 21 million, and it currently grows by about 0.8% a year, by about 0.4% after the 2028 halving. No parliament and no central bank can change that. What else makes good money is shown in the comparison What is good money?

2. Money is created in every crisis

When states need a lot of money in a crisis, central banks buy government bonds and create new money to do it. In 2020 the US money supply M2 grew by 24.5% this way; bitcoin rose 302% in the same year. In the short term, though, the bitcoin price is only loosely tied to the money supply. The data are in the article Money supply M2 and the bitcoin price.

3. Bitcoin is nobody's debt

A government bond is a promise from the state; the money in your account is a promise from your bank. Bitcoin is nobody's promise: if you hold your keys yourself, you have no debtor who can default or repay less. Bitcoin's first block, of January 3, 2009, contains a newspaper headline about the state's second bailout of British banks. Bitcoin was created as an answer to exactly this system.

How big is the mismatch?

States themselves are also starting to hold bitcoin as a reserve. Which ones they are and where their coins come from is in the article Countries with bitcoin reserves.

Where the thesis doesn't hold

"Debt is rising, so bitcoin is rising" is too simple. There are three points you should know:

• The timing is open. High debt can persist for decades; Japan has lived with a ratio above 150% for more than 20 years. If you bet on an imminent collapse, you may wait a very long time.
• Rising debt is no price signal. In 2026 US debt grew by 5.6% through November, and bitcoin is down about 18% since the start of the year (as of Nov 12, 2026).
• Not every state inflates. Thanks to low debt and the debt brake, the franc has kept much of its purchasing power. The argument for bitcoin is weaker in Switzerland than in the US or Italy, but the franc is slowly losing value too.

So debt is a reason to hold bitcoin for many years, not a reason to bet on a quick rise. How to sit through steep declines is described in the article HODL psychology: living with volatility.

What this means for you as a saver

For money you will need in the next few years, a bank account, fixed deposits and bonds remain sensible. For money you leave untouched for ten years or more, it is worth asking whether it should sit in a currency its state can devalue through inflation.

Instead of reacting to headlines about debt levels, it helps to look at where bitcoin stands relative to its long-term trend.

Where bitcoin stands on Nov 12, 2026

Bitcoin trades at 0.66 times the trend, so in the accumulation zone (0.62–0.79×), about 7% above the floor. For CHF 500 you get about 840’000 sats, for €500 about 775’000 sats. The model describes the past and is no guarantee. How it is calculated is in the methodology and in the article The bitcoin Power Law explained.

If you want to protect yourself against creeping devaluation, you don't have to do everything at once. Work out what a monthly savings plan in euros or francs would have produced over the years:

How money, central banks and bitcoin fit together is explained step by step in the academy under Understand & secure.