Will the “Big, Beautiful Bill” Cause a “Big, Beautiful Crisis”?

The Moody’s Downgrade

Last Friday, Moody’s downgraded the U.S. government’s unsecured credit rating to Aa1 from Aaa — on their 21-notch scale. Moody’s is a data intelligence agency that provides global credit ratings based on a host of research and analytical tools that assess both credit risk and operational risk. They summarized America’s recent downgrade as follows:

“Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs. We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration. Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat. In turn, persistent, large fiscal deficits will drive the government’s debt and interest burden higher.”¹https://ratings.moodys.com/ratings-news/443154

Moody’s has essentially thrust the credit worthiness of the United States of America into question. The downgrade reflects fiscal deterioration, a weakened credit profile, and the harsh reality of massive unchecked debt that has been accumulated by the federal government. It also implies broader concerns about debt default, ever-rising borrowing costs, and lower economic growth.

Just How High is US Debt?

U.S. debt is now approaching $37 trillion and easily exceeds the size of the economy. If one divides the national debt among every U.S. citizen, it amounts to over $106,000 per person. If we divide it just among American taxpayers, it would cost over $200,000 each to pay it off.²https://www.andalusiastarnews.com/2025/04/19/column-how-great-a-debt-we-owe/

We’re spending about $3 billion per day just on interest. In 2024, the federal government paid more on interest than defense spending and within 10 years, interest payments alone will likely eclipse spending on a host of other government agencies like education, infrastructure, and research and development.

Here are some staggering American debt perspectives from The Peter G. Peterson Foundation:

• America’s debt is roughly the value of the economies of China, Germany, Japan, India and the United Kingdom combined.
• If every U.S. Household paid $1000/month toward paying down America’s debt, it would take about 23 years.
• Our $36 trillion debt burden is enough money to pay for a 4-year public university degree for every graduating high school student in the country for the next 106 years!³https://www.pgpf.org/article/the-national-debt-is-now-more-than-36-trillion-what-does-that-mean/

The Trump Bill and the Debt Trajectory

In his “Big, Beautiful Bill,” President Trump has promised the largest tax cut in U.S. history, increased border funding, protection for Medicaid, the modernization of air travel, and increased investments in American energy.

But The Committee for Responsible Budget believes the new Reconciliation bill will trigger a debt tsunami that will drive America to an almost certain Fiscal Cliff by 2028:

• Increase debt by $3.3 trillion, or $5.2 trillion if made permanent
• Increase annual deficits to $2.9 trillion (6.9 percent of Gross Domestic Product), or $3.3 trillion (7.8 percent of GDP) if made permanent
• Increase yearly interest costs to $1.8 trillion (4.2 percent of GDP), or $1.9 trillion (4.4 percent of GDP) if made permanent
• Increase debt to 125 percent of GDP, or 129 percent of GDP if made permanent⁴https://www.crfb.org/blogs/adding-house-reconciliation-bill

Debt, Deficits — and the Golden Age

There is a strong correlation between the price of gold and our mounting national debt. Gold prices traditionally rise on debt triggers like money printing, fiscal recklessness, and perpetual budget shortfalls. Further, skyrocketing debt creates uncertainty and erodes trust in the dollar which weakens the economy, suppresses growth, and triggers a series of ‘federal fixes’ that are also favorable to gold.

According to Reason Magazine:

“Gold benefits from rising deficits because it is an option on debt monetization. When government debt becomes unsustainable, and the supply of bonds issued overwhelms the amount demanded, interest rates rise to a point that is intolerable. In response, the government may cap interest rates to prevent borrowing costs from spiraling out of control. This practice, known as yield curve control, requires printing vast amounts of money to buy government bonds—often leading to inflation and rising gold prices.”⁵https://reason.com/2025/04/01/gold-tops-3000/

Last year, Fortune Magazine suggested that if America’s national debt goes unchecked, we would be left with “severe, irreversible scars.”⁶https://finance.yahoo.com/news/america-left-severe-irreversible-scars-113555033.html  Similarly, Deloitte reported on the crisis in “The Debt Mountain,” warning that things “cannot go on as they are.”⁷https://blogs.deloitte.co.uk/mondaybriefing/2024/05/the-debt-mountain.html And the Bipartisan Policy Center cautioned that rising debt poses a threat to the dollar and overall U.S. creditworthiness.⁸https://bipartisanpolicy.org/explainer/why-the-national-debt-matters-for-the-dollar-and-global-economic-strength/

And what has happened since those warnings? U.S. debt surged another trillion dollars. America’s unsustainable national debt fuels demand for gold based on the metal’s safe haven appeal, its negative correlation to a weakening dollar, and its role as a store of value amid the increasing likelihood of a significant fiscal crisis.

This is why gold is now considered a strategic portfolio asset and according to Paul Jackson, the Global Head of Asset Allocation Research and Global Thought Leadership at Invesco, gold’s appeal will continue to increase:

“US government debt is unsustainable on current trends. That could be changed by a mix of reduced primary deficits, stronger GDP growth and lower interest rates. If the difficult choices are not made, I think gold could be ever more attractive.”⁹https://www.invesco.com/apac/en/institutional/insights/market-outlook/uncommon-truths-the-sustainability-of-us-debt-and-gold.html

In 2025, gold prices have been largely driven by historic central bank buying, renewed investor demand, Trump’s tariff wars, and lingering inflation concerns. And amid the unsustainable cycles of budget shortfalls, renewed borrowing, and ever rising debt limits — gold has reaffirmed its role as the world’s ultimate safe haven that protects wealth and preserves value.

“In today’s environment of fiscal erosion, rising yields and mounting geopolitical risk, Gold is once again asserting itself as the world’s most trusted store of value. With the U.S credit rating downgrade, on-going global trade tariffs, unpredictability of interest rates from the Fed and elevated geopolitical risk, one thing is clear: Uncertainty is here to stay … That’s exactly why a long list of the world’s most powerful Wall Street banks are calling this moment in financial history ‘The Golden Age of Trading.’ And in every Golden Age – Gold itself always tends to outperform.”¹⁰https://www.fxempire.com/forecasts/article/moodys-just-downgraded-america-heres-why-gold-could-go-parabolic-1520155

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1. https://ratings.moodys.com/ratings-news/443154
2. https://www.andalusiastarnews.com/2025/04/19/column-how-great-a-debt-we-owe/
3. https://www.pgpf.org/article/the-national-debt-is-now-more-than-36-trillion-what-does-that-mean/
4. https://www.crfb.org/blogs/adding-house-reconciliation-bill
5. https://reason.com/2025/04/01/gold-tops-3000/
6. https://finance.yahoo.com/news/america-left-severe-irreversible-scars-113555033.html
7. https://blogs.deloitte.co.uk/mondaybriefing/2024/05/the-debt-mountain.html
8. https://bipartisanpolicy.org/explainer/why-the-national-debt-matters-for-the-dollar-and-global-economic-strength/
9. https://www.invesco.com/apac/en/institutional/insights/market-outlook/uncommon-truths-the-sustainability-of-us-debt-and-gold.html
10. https://www.fxempire.com/forecasts/article/moodys-just-downgraded-america-heres-why-gold-could-go-parabolic-1520155