The US has a $40 trillion debt crisis. Billionaire Warren Buffett knows how to solve it

America had a headline-grabbing milestone this summer. Unfortunately, it wasnt our America 250 celebration. Rather, it was passing the $40 trillion mark on our

$40 trillion is a number that is very difficult to get your head wrapped around. Its more than 120% of our GDP, a ratio that sounds more applicable to an emerging market in crisis than the in the world.

While the debt in and of itself is a problem, there are two related issues that are critical. One is the rapid growth in debt accumulation. In 2017, we passed the $20 trillion mark, and less than 10 years later, we doubled that to $40 trillion.

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This begets the second issue, which is the cost to finance all that debt.

We no longer have the "exorbitant privilege" as it is often referred to of countries adding U.S. dollar reserves no matter what, and that means now, investors in our debt, if we can find them, are price-sensitive. In laymans terms, they are requiring more of a premium to lend the U.S. government money.

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Not only are we running very high deficits (both in absolute terms of $2 trillion a year and in terms of deficits/GDP) that need to be financed, but in recent years, the Treasury has been financing our debt for short-term durations. While a bit cheaper, this debt is in constant need of refinancing (not to mention financing this way tends to be more inflationary).

The reality is that the interest we are required to pay on the debt — that is, money we are spending to finance things we have already bought — is larger than our spending on the military and, if things keep going the same way, may one day be the governments largest expense category.

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So, the question that comes up is, what can we do? Is there even a way out of this?

The answer is yes. We obviously have the tools to be able to get a handle on our debt.

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The problem is that we do not have the political will to do so.

This is a "both parties" problem. The federal government takes in more than $5 trillion each year. For scope, that is more than the GDP of every country in the world except the U.S. and China, and about the size of the GDP of Germany.

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Yet, our government still overspends by $2 trillion.

Despite this, many of those in government refuse to address the rampant waste, fraud and abuse in the system, which estimates put at a quarter trillion dollars to $1 trillion per year.

BILLIONS SPENT BY

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