On Friday afternoon, October 16, the Treasury Department closed the books on fiscal year 2026. Nobody holds a press conference for this. The department posts a statement full of tables, and the tables said the government took in $5.4 trillion, spent $7.4 trillion, and borrowed the $1.99 trillion difference, the largest shortfall since 2021.

One line in those tables read $1.05 trillion. That's what the United States paid in net interest on its debt last year, about $2.9 billion a day. It was more than the government spent on national defense, $965 billion, and more than it spent on Medicaid, $723 billion. Only Social Security and Medicare cost more, and Medicare only beat it by about $21 billion.

Every other dollar in those tables buys something, whether or not you approve of what it buys. Interest pays for money that's already been spent.

Put the two big numbers side by side. Of the $1.99 trillion the government borrowed in fiscal 2026, $1.05 trillion, or 53%, went to pay interest on what it had borrowed before.

Last week I checked whether the squeeze people complain about is real. The September numbers came out the next day and made the case better than I did. Prices up 3.7% over the year, energy up 20.4%, and the average worker's hourly pay, after inflation, down 0.7%. This week is about one of the forces underneath that squeeze, and it's bigger than any crew of scammers.

We've covered this ground before. In September of last year, we wrote about $9.2 trillion in Treasury debt coming due and an interest bill of about $950 billion a year, "approaching $1 trillion." A year later it's past that line.

This issue is about where that money goes and who pays it. The national debt bills everyone, but it doesn't bill everyone the same, and the people who own the least end up paying the most. The machinery usually gets described in words designed to make normal people stop reading, so I'll translate as we go. Both parties built this debt over decades. If you came looking for a villain with a party label, this isn't that issue.

And because this is the Dead Drop, the second half is about the salesmen who turn your fear of all this into a 64% markup.

The Vicious Cycle

Late Sunday night, Mark Zandi, the chief economist of Moody's Analytics, wrote a note that Fortune reported Monday morning. One sentence in it describes the whole problem.

Zandi's note is about stage three. The yield on the 10-year Treasury note, the interest rate investors demand to lend the government money for ten years, closed 2025 at 4.18% and stood at 5.15% on Monday, against a Congressional Budget Office forecast of 4.1% for the year. Zandi wrote that "global investors see all this and appear to be demanding a higher rate to compensate for the mounting risk." Lenders had already started grading the borrower. In May 2025, Moody's Ratings took away the last perfect credit rating the United States held, citing the growth of the debt and the interest on it.

There's another side to this, and I'd be shortchanging you if I skipped it. Long-term rates have climbed across the wealthy world this year. The International Monetary Fund says the average 10-year government bond yield in the G7 rose more than a percentage point between February and September, to a near two-decade high. Treasury Secretary Scott Bessent has said higher U.S. yields would worry him if they were "idiosyncratic," meaning specific to America. Zandi's answer is that the Treasury market is the benchmark everything else is priced against, "far and away the most important one."

The Rollover

The government doesn't have one big loan. It has thousands of them, bills and notes and bonds that come due on different dates, and each one that matures gets paid off by borrowing again at whatever the market charges that day. Roughly a third of the debt held by the public, more than $10 trillion, comes due within 12 months, and the Treasury has been leaning on short-term borrowing, which keeps today's bill smaller and puts more of the debt on that clock.

That's how the cheap money of a few years ago works its way off the books. At the end of September 2021, the average interest rate on the government's marketable debt was 1.47%. Five years later it was 3.52%. Anybody who bought a house in 2021 and had to buy again this year knows the feeling. TD Securities estimates that one more percentage point across the board would add $310 billion to the 2027 interest bill.

The Race

The one way out that doesn't require anyone to raise a tax or cut a program is growth. If the country's income grows faster than its interest bill, the debt gets lighter relative to the economy even while it gets bigger in dollars. Economists call this r versus g, the interest rate against the growth rate, which is about as close as the profession gets to a sports analogy.

Over the past year the economy grew about 6% before adjusting for inflation and about 2% after. The interest bill grew 8%.

Bessent is betting on growth: "With 3% growth, we grow our way out of this." Phillip Swagel, who runs the Congressional Budget Office, has done that arithmetic. At interest rates of 4% to 5%, he said, the economy would need to grow 5% to 6% a year after inflation to stabilize the debt, and "it's probably not plausible that growth alone will stabilize our fiscal trajectory." The most recent quarter came in at 2.2%. What's left is changes to taxes and spending, which Swagel called "political choices," and nobody running for anything this fall is eager to make them.

Where the Interest Goes

Every dollar of that $1.05 trillion lands with whoever owns the government's debt. Foreign governments and investors held $9.3 trillion of Treasury securities in August, about 29% of the debt held by the public. The Federal Reserve held $4.6 trillion, about 14%. After them come mutual funds and money market funds, banks, state and local governments, pension funds, insurance companies, and households that buy bonds directly.

Among households, the bonds sit about where you'd expect, and the Federal Reserve keeps the count.

Nothing about that is crooked. Lenders get paid, that's the deal, and some of those bondholders are pension funds sending checks to retired teachers and firefighters. But the interest on the national debt flows mostly toward people and institutions that had money to lend, and the costs run the other way, through the rate you pay, the rate you earn, the dollars you hold, and the programs you count on.

The Rate You Pay

Mortgage rates take their cue from the 10-year Treasury, so when lenders demand more from Washington, they demand more from you. Freddie Mac's average 30-year mortgage rate was 7.40% last week, up from 6.27% a year earlier. In 2021 it averaged 2.96%.

New car loans at commercial banks averaged 7.54% in August, and credit cards charged 22.36% to people who carry a balance, according to the Federal Reserve. Card rates track the Fed's own rate, which it raised in September, more than the bond market, but the people paying them are the same people: the ones without enough set aside to avoid borrowing.

The Rate You Earn

The same rates pay the other side. The average money market fund yielded 3.70% as of October 18, according to Crane Data, so $50,000 parked in one earns about $1,850 a year for doing nothing. A $5,000 card balance at 22.36% costs about $1,118 a year. Same economy, same Federal Reserve, and one family gets paid for having money while the other gets charged for not having it.

The Dollars You Hold

That third way out is the one economists mention quietly. The government owes dollars, so if each dollar buys less, the debt shrinks in real terms without anyone casting a vote. "Defaulting can take many different forms," Kent Smetters, a Wharton School economist, said in comments Fortune published this month. It "could actually be just higher inflation, never getting back to 2% and so forth."

Inflation doesn't charge everyone the same either. It costs the people holding dollars: cash in the bank, and paychecks that adjust once a year if they adjust at all. People who own houses and stocks are partly protected, because those assets tend to reprice as the dollar falls, and a family with a fixed 3% mortgage watches inflation shrink its debt the same way the government does. Renters get the other end of it. A Bureau of Labor Statistics research index found that from 2006 to 2023, the lowest-income fifth of households faced inflation of 2.66% a year against 2.38% for the highest-income fifth, with housing costs driving much of the gap.

The Programs You Count On

Interest already costs more than national defense or Medicaid, and it's projected to be the fastest-growing part of the budget for years. Social Security's trustees project that its retirement trust fund will run dry in late 2032, after which the program could pay only 78% of scheduled benefits unless Congress acts; Medicare's hospital insurance fund follows in 2033, at 89%. Those dates come from payroll taxes and an aging country, not the interest bill. But the interest bill is a big reason Congress has so little room to close the gap, and the retirees with the least saved lean hardest on those checks.

What Nobody Knows

None of this means the dollar collapses next month, and you should be suspicious of anyone who says it does.

The economists quoted this week split into two camps, and none of them gave a date. On the worried side, Zandi sees early signs of the spiral, and Ray Dalio of Bridgewater Associates has warned of an economic "heart attack." On the other, Louise Sheiner of the Brookings Institution told Bloomberg, "It doesn't seem like a crisis," calling it instead "a slow eating away" of the government's room to act, and Gennadiy Goldberg of TD Securities said, "A fiscal apocalypse is not upon us just yet." Debt auctions are still drawing solid demand, and the economy is still growing faster than the average rate on the debt. Even Swagel said, "Somehow we're managing, even with interest rates going up," though he warned that a bad shock could set off a "turbocharger effect," with higher rates feeding straight back into bigger deficits.

So the honest forecast is a slow squeeze with a real chance of something worse, and that's a terrible product to sell. Nobody earns a commission on "probably slowly, unless something breaks."

I don't know which camp is right. I do know which one the salesmen quote.

The Collapse Pitch

In September, 92% of registered voters told pollsters for the Peter G. Peterson Foundation that they were concerned the national debt is pushing up their own cost of living. The question opened by telling them economists agree it can, which can't have hurt, but the number has held between 90% and 93% every month since February in a survey run jointly by a Democratic polling firm and a Republican one. When that many people fear the same thing, somebody's going to sell them a cure.

The people who own the least don't get this call. Nobody pitches a silver IRA to a family that can't cover a $400 emergency. The call goes to people who've built something, which means a lot of you.

Safeguard Metals sold coins by phone, and from December 2017 through at least July 2021, according to the Securities and Exchange Commission, its agents worked from scripts built on two fears. One was a crash: "They're saying the last recession is going to be a walk in the park compared to what's coming." The other was a law Congress had supposedly passed, quietly, letting the big banks freeze retirement accounts in a crisis.

There was no such law. The SEC says the real rule covered only money market fund investments and allowed limits on withdrawals temporarily, in rare circumstances. But picture who was on the other end of the line: people at or near retirement, a lifetime of savings in an account they couldn't see or touch, listening to a confident stranger explain that the government was about to lock the door. The agent had the way out. Move the money into a self-directed IRA, the kind allowed to hold physical metal, and fill it with silver coins.

A consent order in the CFTC's case describes one customer, a retiree in Arkansas with about $1,000,000 in bonds in his IRA. The agent told him the stock market "was in for a major correction and was overvalued," that "the Federal Reserve was devaluing the dollar by excessive printing," and that rising inflation "was going to make precious metals more valuable." He was told to put his entire retirement into silver coins at "market value," and that "the only commission charged" would be about 5% when he sold. Between October 2019 and August 2020, he sold the bonds and bought the metal.

The SEC says Safeguard's average markup on silver coins, which made up more than 97% of what it sold, was about 64%, while its customer agreement described a margin of usually 4% to 23%. It took in about $67 million from more than 450 investors, most of them elderly, and kept about $25.5 million in markups. A 64% markup means $100,000 buys about $61,000 worth of silver, and the metal has to rise 64% just to get back to even. The crash never had to arrive for the con to work.

In 2025, a federal judge entered final judgments of $55,959,869 in the SEC's case, offset against $25,569,303 in restitution and an equal penalty in the parallel case brought by the Commodity Futures Trading Commission and 30 states. I couldn't find any record of how much the victims have actually gotten back. The owner, Jeffrey Santulan, had changed his name to Jeffrey Ikahn by 2023. The filings don't say why.

The cases keep coming. In May, a federal grand jury in Dallas indicted Damien Moran, 36, on 10 counts of wire fraud, alleging that his companies steered elderly customers' retirement savings into gold and silver coins at undisclosed markups and sometimes never delivered the metal. "If you have or plan to target seniors and elderly folks, we will find you, charge you, and seek stiff prison sentences," said Ryan Raybould, the U.S. attorney in Dallas. Moran is presumed innocent.

Two weeks ago, in No. 121, a 78-year-old woman in Marion, Illinois bought more than $823,000 in gold because men posing as Microsoft support and an Edward Jones fraud investigator told her to buy it for safekeeping. They used fake names. These dealers had websites and customer agreements, and they sold the same feeling: that metal you can hold is safer than an account you can't see.

The CFTC puts the method in one sentence: "Precious metals frauds are on the rise and scammers prey on fears related to the durability of the United States financial system." The pitch doesn't ask you to believe anything false about the debt. The debt is real, and Moody's chief economist really did write "vicious cycle" this week. The salesman borrows a true fear, attaches a false deadline, and sells the cure at a markup you can't see. A slow problem you can't do anything about becomes a fast one you can fix by Friday, and fixing it feels like taking control back. What the customer is really buying is the feeling of having done something.

None of this is an argument against owning gold or silver. Plenty of careful people hold some, and we've written here about why. It's an argument against buying it from a stranger who called you, scared you, and won't put the spread in writing.

Retirement accounts are where the money is, and regulators say so in nearly those words. "Fraudulent precious metals dealers push the idea of retirement plan rollovers for one simple reason," a CFTC flier explains. "That is where most people have the bulk of their investing dollars." The custodian won't catch it either. "IRA custodians do not vet precious metals dealers or their sales practices," state regulators warn, and by the first statement the account is already down by the dealer's spread.

Field Manual

Six rules for a slow squeeze and a fast pitch.