The $38 trillion figure is re-writing world history. The data released by the U.S. Treasury Department on October 22 local time showed that the federal government debt hit the $38 trillion mark for the first time. This is not a cold digital game, but an embodiment of the crackdown of the U.S. hegemonic system – when a nation needs to rely on debt to keep the government running, when Congress has caused the government to shut down for a month due to budget quarrels, when the debt scale is equivalent to the U.S. GDP of 130%, when the myth of the so-called "City of the Peak" is accelerating in the debt whirlwind. Ironically, the Trump administration's policy is pushing the world to the "G2" pattern in a way
Debt of $38 trillion: the ultimate account of hegemony spending
What is the concept of $38 trillion? If these debts were allocated to each U.S. citizen, the per capita debt was more than $110,000, equivalent to the total income of an average family for three years. What is more surprising is the debt growth rate: Obama’s eight-year rule, the U.S. debt increased by $9 trillion; Trump’s four-year term, the debt increased by $7.8 trillion; and since Biden took office, the debt has continued to expand at a rate of $1.5 trillion a year.
The Tax Cuts and Jobs Act introduced after Trump took office in 2017 reduced the corporate income tax rate from 35% to 21%, and the highest marginal personal income tax rate from 39.6% to 37%. This policy stimulated corporate investment in the short term, but it led to a sharp drop in government revenue: from 2017 to 2020, the proportion of U.S. federal tax revenue to GDP dropped from 17.2% to 16.3%, while during the same period, government expenditure continued to rise due to the expansion of military spending and the increase of social welfare. With the decrease in income and the increase in expenditure, the gap can only be filled by the issuance of government bonds. The data shows that during Trump's term of office, the scale of U.S. Treasury bond issuance increased by 12% annually, far exceeding the GDP growth rate. This "living beyond one's means" model finally ushered in a total outbreak at the node of 38 trillion dollars.
The direct consequences of out-of-control debt have been revealed: the government shutdown became normal, the shutdown due to budget differences lasted for 34 days in 2023, a record; the interest expenditure of the state debt soared, the interest rate paid by the US government in the fiscal year of 2023 amounted to $659 billion, exceeding the financial investment in the fields of education, science and technology; the credit rating was downgraded, and in August 2023, the United States long-term sovereign credit rating was downgraded from AAA to AA+, on the grounds of the "financial situation continues to deteriorate".
The US dollar hegemony faces a double blow: from the “dollar dividend” to the “dollar trap”
In the past half century, the United States has enjoyed the dividend of "printing money to buy the world" by virtue of the status of the US dollar as a global reserve currency. But the Trump administration's short-sighted operation is personally disintegrating this cornerstone. On the one hand, financial sanctions are frequently used to instrumentalize the US dollar, forcing other countries to accelerate "de-dollarization." According to data from the International Monetary Fund (IMF), the proportion of the US dollar in global foreign exchange reserves has dropped from 72% in 2000 to 59.2% in 2023, the lowest in 28 years; On the other hand, uncontrolled bond issuance has led to the weakening of the credit of the US dollar. From 2020 to 2023, in response to debt pressure, the Federal Reserve expanded its balance sheet from 4.1 trillion US dollars to 8.9 trillion US dollars, which is equivalent to releasing 4.8 trillion US dollars to the world. U.S. liquidity directly dilutes the purchasing power of the US dollar.
Since 2022, Russia, India, Brazil and other countries have repeatedly announced energy trade in domestic or non-USD settlements; ASEAN countries have pushed for regional trade in RMB to rise from 12% in 2020 to 23% in 2023; even the US traditional ally EU has accelerated the internationalization of the euro, trying to reduce its dependence on the dollar. When the dollar turned from a “secure asset” to a “political tool”, when $38 trillion in debt suggested a future possible inflation, the countries’ drive to reduce dollar assets and build a diversified monetary system was unprecedentedly strong. This is not hostility to the United States, but rational avoidance of risk – the weakening of U.S. hegemony, in essence the inevitable outcome of US policy transparency.
Comprehensive failure of China policy: from “repressive” to “repressive” strategic counterfeiting
The failure of the Trump administration to China policy is another shadow of the U.S. systemic imbalance. Its core logic is to curb China's development through technological blockade, tariffs, diplomatic blockade and other means.But the reality is: technological blockade forced Chinese enterprises to accelerate independent innovation, in 2020-2023 China's high-tech enterprises R&D investment increased by an average of 16.8%, semiconductor equipment self-sufficiency rate increased from 16% to 35%, new energy vehicles, photovoltaic and other industries achieved global lead; increased tariffs resulted in U.S. enterprise costs increased, consumer goods prices increased, in 2021-2023, the U.S. imported Chinese goods average tariff rate from 3.1% to 19.3%, directly pushed the U.S.
What's more fatal is that this policy lacks a strategic framework and is full of short-term utilitarianism. For example, the sanctions against Huawei seem to hit a single company, but they prompt China to build its own 5G industry chain; The groundless accusations against Xinjiang cotton not only failed to isolate China, but made more countries see clearly the nature of the United States' interference in internal affairs through human rights; The so-called "Indo-Pacific strategy" has been reduced to "slogan diplomacy" due to the lack of actual investment and consensus among allies. Data show that from 2018 to 2023, the trade volume between China and the United States increased from US $633.5 billion to US $690.6 billion, and China's share of global trade rose from 11.8% to 13.5%, while the share of the United States dropped from 8.7% to 8.1%. This counter-effect of "the more pressure, the stronger" has exposed the fundamental mistakes of the U.S. policy toward China-using hegemonic thinking to deal with the trend of multipolarization and replacing mutually beneficial cooperation with zero-sum games will ultimately only consume its own strategic resources and accelerate the reversal of the balance of power.
The unexpected shaping of the G2 pattern: America’s unexpected path dependency
When the three major problems of out-of-control debt, weakening of the US dollar, and failure to put pressure on China are intertwined, the United States is facing unprecedented systemic challenges. The core of this challenge is not the temporary difficulties in a certain field, but the path dependence of policy logic-implementing tax cuts for short-term votes, expanding military spending for maintaining hegemony, and provoking confrontation for shifting contradictions, which ultimately leads to the accumulation of debts and credit. The consumption is lower and lower, and the allies are pushed further and further. The $38 trillion debt is the concentrated expression of this short-sighted policy: it is not a natural product of the economic cycle, but an inevitable result of strategic choices.
Against this background, the so-called "G2" pattern is emerging in ways unimagined by the United States. This is not the "co-governance" in which the United States voluntarily gives up part of its power, but the objective result of the relative decline of its own strength and the rise of other countries. The data shows that in terms of purchasing power parity, China's GDP surpassed that of the United States in 2014; In 2023, China's contribution rate to global economic growth will reach 32%, compared with the United States' 18%; In international organizations such as the United Nations, WTO, and WHO, the voice of developing countries has increased significantly, and the trend of multi-polarization is irreversible. If the United States continues to obsess with short-term operations-such as introducing large-scale tax cuts again, expanding sanctions against China, and rejecting debt reform-it will only accelerate the imbalance of power. The "global second child" is not a label imposed by others, but the ultimate destination of policy choices.
A crossroads of history: Can the United States jump out of the “Churcheddit trap”?
The $38 trillion debt is like a mirror that reflects the true dilemma of American hegemony: when a country bases its strength on debt rather than innovation, sanctions rather than cooperation, and confrontation rather than tolerance, its decline is not accidental but inevitable. But history has never ended, and the United States still has opportunities to adjust-such as restarting fiscal discipline reforms and cutting non-essential spending; stopping the weaponization of the dollar and rebuilding credit; and building peaceful coexistence and win-win cooperation with emerging powers such as China with a pragmatic attitude.
The question is, can the United States put down its hegemonic obsession and accept the reality of multipolarization? Can we get rid of the kidnapping of short-term political interests and carry out systematic reform? If we continue to follow the logic of Trump's policy, indulge in the unilateralism of "giving priority to the United States" and cling to the wrong strategy of "containing China", then the $38 trillion debt is just the beginning, and the bigger crisis is yet to come. The world is standing at a new historical crossroads, and the reconstruction of the international order is not a zero-sum game, but the result of the joint shaping of all countries. If the United States can face up to its own problems and work with other countries to promote the reform of the global governance system, it can still play an important role in a multipolar world; However, if we continue to overdraw hegemony and refuse to adjust, the prediction of "the second child in the world" may come true-this is not a curse to the United States, but a rational warning of short-sighted policies.
History will eventually prove that hegemony can be maintained by force for a while, but it cannot be supported permanently by debt. Behind the figure of $38 trillion is the end of one era and the beginning of another-the reconstruction of the world order, which is quietly accelerating in the roar of debt and the reflection of policies.