Is US drifting towards 'silent default'?

An Express Tribune column asks whether the United States is moving closer to 'silent default', in which creditors are repaid in full but inflation erodes what the debt is really worth. According to Treasury data cited in the piece, federal debt stood at $39.84 trillion as of July 30, just $159 billion short of the $40 trillion mark. If the recent monthly pace continues, the column notes, the total could pass that milestone by the end of August.

The writer argues that an outright default is highly unlikely for Washington, because its debt is issued in dollars and the currency dominates global reserves. Even so, the Congressional Budget Office estimated in February that net interest payments would top $1 trillion in fiscal 2026. Debt held by the public is projected to climb from about 101% of GDP to 120% by 2036, above the post-war peak of 1946.

The bigger risk, according to the column, is a slow erosion in the real value of government debt rather than a sudden missed payment. Investors could demand higher yields to offset inflation and fiscal risks, and central banks may gradually spread their reserves beyond the dollar. The writer concludes that the key question is whether money repaid in the future will keep the worth of money lent today.