What’s your limit on a typical credit card in your wallet? And if your borrowing limit is higher today than it was when you turned twenty-one, ask yourself why.
To say you can borrow more today relative to twenty-one is likely a blinding glimpse of the obvious. You likely earn quite a bit more now, not to mention that you have greater wealth stored.
Moving on, let’s contemplate Nvidia. Its debt in 2026 is somewhere in the $8-11 billion range. Which is interesting only insofar as it’s certainly true that in 1996 and 2006 Nvidia for the most part couldn’t have even borrowed $1. Why? The answer is simple. Twenty and thirty years ago Nvidia’s near and long-term odds weren’t very promising, and this reflected in its capacity to borrow.
In 2026, Nvidia not only has $60 billion in cash or cash equivalents on its books, it’s also valued above $4 trillion. To say it can borrow now, and in size amounts, is another one of those blinding glimpses of the obvious.
An individual or business’s ability to borrow is directly an effect of near-term incomings, but much more importantly, market expectations of long-term incomings. As we progress at work and in wealth stored, lenders expand our borrowing capacity alongside the progress.
Do individuals and businesses routinely borrow at those limits or close to them? Some do, and some don’t. Ted Turner was known to routinely borrow as much as the markets would allow, Rupert Murdoch has long had the same reputation, while their good friend John Malone is known to be a bit more careful.
Which brings us to governments. Why does Russia “only” have around $480 billion in total debt versus the U.S.’s total debt of $39 trillion? Is Vladimir Putin a closet classical thinker who believes government spending and borrowing are a tax on freedom and prosperity? It’s a clown question.
Furthermore, no individual, business or nation gets to choose how much to borrow in the first place. Money is production, which means exacting, ruthless markets for money make these decisions opposite what the experts tell you. Translated, Russia has relatively small amounts of debt because lenders aren’t enamored of its long-term growth prospects.
All of which explains the size of the U.S. Treasury’s debt. It’s $39 trillion not because U.S. politicians are socialist where Putin is a free market capitalist, but because lenders are looking into the distant future and seeing tax revenues flowing into Treasury that make present incomings appear small by comparison. And they’re lined up to lend to the U.S. with the latter in mind.
Could the U.S. political class be more prudent about borrowing against such enormous prosperity, no doubt it could but then as history has long made plain, no one spends the money of other people nearly as carefully as they do their own. Certainly not politicians. Which means they spend enormous amounts, while borrowing a lot more because they can.
Why can they? Because the U.S. has been growing for decades, and is expected to grow much more in the future in ways that will shower Treasury with much more tax revenue.
Yes, it’s the soaring tax revenues born of growth that are driving the debt, yet the experts continue to say we’ll “grow” our way out of the debt. Their naivete is almost appealing so at odds is it with reality.
Growth is sadly and comically the consensus solution for fixing the debt. That’s why debt will continue to go up alongside falling borrowing costs for Treasury.
