Highlights

  • The CBO projects US federal debt held by the public will rise from about 100% of GDP in 2025 to a record 156% by 2055 under current law.
  • That marks roughly a 56-percentage-point increase and would surpass the prior post-WWII record set in 1946.
  • Rising deficits are driven primarily by Social Security, Medicare and interest costs, which CBO sees growing from 6.2% to 7.3% of GDP by 2055.
  • The trajectory feeds into crypto's “debasement trade” narrative, though real Treasury yields near 2.4% remain a headwind for bitcoin as a hedge.

The Congressional Budget Office's latest long-term budget outlook projects that federal debt held by the public will climb from roughly 100% of GDP in 2025 to a record 156% by 2055 if current tax and spending laws remain unchanged, a figure that resurfaced in market commentary this week via analyst newsletter The Kobeissi Letter. That would mark the highest debt-to-GDP ratio in US history, surpassing the prior record of roughly 106% set in 1946 in the aftermath of World War II by around 50 percentage points. The CBO's projection underscores a fiscal trajectory that has become a recurring reference point for investors positioning in scarce assets like bitcoin and gold as a hedge against long-run currency debasement.

What the CBO's Numbers Show

CBO's baseline scenario shows the debt-to-GDP ratio climbing steadily over the next three decades as annual deficits widen from about 6.2% of GDP in 2025 to 7.3% by 2055. The office attributes the bulk of that growth to three drivers: Social Security outlays as the US population ages, Medicare spending, and net interest payments on the debt itself, which compound as both the debt stock and prevailing interest rates rise.

The 156%-by-2055 figure is itself CBO's baseline case; the office's alternative scenarios, which account for the likelihood that some temporary tax provisions get extended and discretionary spending grows with the economy rather than staying flat, point even higher. CBO's own alternative-scenario modeling projects debt could reach roughly 175% of GDP by 2055 under those more realistic assumptions. Separately, CBO's 2026 update to its baseline outlook already shows the ratio running hotter than the March 2025 projection cited by Kobeissi, reflecting worse near-term deficit trends than the office anticipated even a year ago. Total US federal debt crossed $40 trillion earlier in 2026, a threshold that took just over a year to clear after the debt ceiling was lifted, with roughly $2.8 trillion added since early July alone.

The Crypto Angle: Debasement Trade

For crypto markets, the widening fiscal gap feeds directly into what traders call the “debasement trade” — the thesis that persistently large deficits eventually force easier monetary policy, since governments cannot indefinitely let borrowing costs rise without straining their own budgets, pushing investors toward assets with fixed or slow-growing supply like bitcoin and gold. That dynamic has shown up in market pricing this year: bitcoin's correlation with gold has climbed from barely positive at the start of 2026 to more than 50%, a shift market strategists read as evidence that investors increasingly treat bitcoin as a scarce monetary asset rather than purely a high-beta tech-adjacent trade, a thesis that has gained traction alongside separate reports of global M2 money supply hitting record highs. Still, the debasement trade has faced a real obstacle in 2026 — 10-year real Treasury yields have held near 2.4%, letting investors earn a solid inflation-adjusted return from government bonds without taking on crypto's volatility, which has blunted bitcoin's upside even as the fiscal backdrop has worsened. The CBO's latest figures give that debate fresh ammunition: a debt path that reaches 156% of GDP under the baseline case, and potentially 175% under more realistic assumptions, adds to the case that today's fiscal trajectory is not a temporary post-pandemic anomaly but a structural, multi-decade trend that specifically favors assets outside the traditional dollar-denominated system.

What to Watch Next

The next concrete marker to watch is CBO's next full annual long-term budget outlook, typically published in the first half of the year, which will show whether the 2026 fiscal trajectory has worsened further relative to the 156% baseline cited this week. More immediately, real Treasury yields are the metric likely to matter most for the debasement trade in the near term: a decline toward or below 2% would remove the main obstacle that has kept bond yields competitive with bitcoin as an inflation hedge. Investors tracking the fiscal-debasement narrative will also be watching whether total US federal debt, which crossed $40 trillion earlier this year, approaches the next round-number threshold, and whether bond markets keep flashing the kind of stress seen in other recent global debasement warnings as that trend continues.

FAQ

What debt-to-GDP ratio does the CBO project for 2055?
The CBO's baseline long-term outlook projects federal debt held by the public will reach 156% of GDP by 2055, up from about 100% in 2025.

What is driving the projected rise in US debt?
CBO attributes most of the increase to Social Security, Medicare and net interest costs, which push annual deficits from 6.2% to 7.3% of GDP by 2055.

How does this connect to crypto markets?
Rising US debt feeds the “debasement trade” thesis, where investors buy scarce assets like bitcoin and gold as a hedge against long-run currency devaluation from persistent deficits.

Could the debt-to-GDP ratio go even higher than 156%?
Yes — under CBO's alternative-scenario modeling, which assumes temporary tax provisions get extended, debt could reach roughly 175% of GDP by 2055.