US Treasury reveals America is insolvent and famed economists warn of ‘fiscal catastrophe.’ Is your portfolio prepared?

US Treasury reveals America is insolvent and famed economists warn of ‘fiscal catastrophe.’ Is your portfolio prepared?

Jing Pan

Thu, August 13, 2026 at 3:30 PM GMT+3 8 min read

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America's mounting debt has long raised concerns. But following the Treasury Department's latest report, some experts say the situation has reached a breaking point — the nation is now effectively "insolvent."

"The U.S. government is insolvent. That's not hyperbole," wrote Steve Hanke, professor of applied economics at Johns Hopkins University and David M. Walker, former U.S. Comptroller General, in a recent Fortune op-ed (1).

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They pointed to newly-released Treasury financial statements showing that as of Sept. 30, 2025, the federal government held $6.06 trillion in total assets against a staggering $47.78 trillion in liabilities (2).

But even that figure doesn't tell the full story.

It excludes unfunded obligations tied to major social insurance programs like Social Security and Medicare. The 75-year unfunded social insurance obligation — the gap between projected spending and revenues — jumped by $10.1 trillion in the past fiscal year to $88.4 trillion. Add that to the official balance sheet liabilities, the authors noted, and total federal obligations would exceed $136.2 trillion.

At the same time, the government continues to spend far more than it brings in. In fiscal year 2025, federal revenue totaled $5.24 trillion, while spending reached $7.34 trillion.

To illustrate the scale, the authors suggest shrinking the numbers by eight zeros — and viewing federal finances like a "household budget in freefall."

"That household earns $52,446 and spends $73,378 — running a $20,932 annual deficit. Its total liabilities and unfunded promises amount to $1,361,788 against just $60,554 in assets, leaving it $1.3 million in the hole. Uncle Sam, by any accounting standard, is insolvent," they wrote.

In their view, the U.S. is now "facing a fiscal catastrophe," with a long-deferred reckoning becoming impossible to ignore.

The figures are indeed alarming, but the U.S. may not be "insolvent" in the traditional sense. Unlike a household or business, America is the issuer of the world's reserve currency — meaning it has the ability to create money to meet its obligations.

On that point, Ray Dalio, founder of the world's largest hedge fund, Bridgewater Associates, has warned that the U.S. is heading toward a "debt death spiral" — but he doesn't expect an outright default.

"There won't be a default — the central bank will come in and we'll print the money and buy it," he said. "And that's where there's the depreciation of money."

In other words, the government may never technically run out of dollars — but those dollars can lose value fast.

In fact, the erosion in the value of the dollar is already visible. According to the Federal Reserve Bank of Minneapolis, $100 in 2025 has the same purchasing power as just $12.06 did in 1970 (3).

The good news? Savvy investors have long found ways to protect their wealth — even when Washington's fiscal math stops adding up.

A safe-haven shines again

To shock-proof your investments, Dalio emphasized the value of diversification — and highlighted one time-tested asset in particular.

"People don't have, typically, an adequate amount of gold in their portfolio," he said. "When bad times come, gold is a very effective diversifier."

Gold has long been considered a go-to safe haven. It can't be printed out of thin air like fiat money and because it's not tied to any single currency or economy, investors often flock to it during periods of economic turmoil or geopolitical uncertainty, driving up its value.

Despite a recent pullback, gold prices have climbed more than 45% over the past 12 months.

Other prominent voices see further potential. JPMorgan CEO Jamie Dimon recently said that in this environment, gold can "easily" rise to $10,000 an ounce.

One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.

Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold, making it an option for those looking to help shield their retirement funds against economic uncertainties.

When you make a qualifying purchase with Priority Gold, you can receive up to $10,000 in precious metals for free.

Read More: Millionaires under 43 hold only 25% of their wealth in stocks. Here's where their money is actually going

A time-tested income play

Gold isn't the only asset investors turn to during inflationary times. Real estate has also proven to be a powerful hedge.

When inflation rises, property values often increase as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to go up, providing landlords with a revenue stream that adjusts for inflation.

Over the past ten years, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index has jumped by 87%, reflecting strong demand and limited housing supply (4).

Of course, high home prices can make buying a home more challenging, especially with mortgage rates still elevated. And being a landlord isn't exactly hands-off work — managing tenants, maintenance and repairs can quickly eat into your time (and returns).

The good news? You don't need to buy a property outright — or deal with leaky faucets — to invest in real estate today. Mogul is a crowdfunding platform that offers an easier way to get exposure to this income-generating asset class.

It's a real estate investment platform offering fractional ownership in blue-chip rental properties, which gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 a.m. tenant calls.

Founded by former Goldman Sachs real estate investors, the team hand picks the top 1% of single-family rental homes nationwide for you. In other words, you gain access to institutional-quality offerings for a fraction of the usual cost.

Each property undergoes a rigorous vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.

You can sign up for an account and then browse available properties here.

Another option for accredited investors with $100,000 to invest is Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.

Lightstone DIRECT's direct-to-investor model ensures a high degree of alignment between individual investors and a vertically-integrated, institutional owner-operator — a sophisticated and streamlined option for individual investors looking to diversify into private-market real estate. Over nearly four decades, Lightstone has delivered strong risk-adjusted performance — including a 27.6% historical net IRR and a 2.54x historical net equity multiple on realized investments since 2004.

With Lightstone DIRECT, accredited individuals can access the same multifamily and industrial assets Lightstone pursues with its own capital, meaning they buy in alongside you.

Get expert advice

If all of this talk of geopolitics and inflation makes your head spin, it may be better to talk with a professional instead. This is especially true for retirees, many of whom rely on the U.S. fiscal system to function in order to secure their retirement — whether through markets or Social Security benefits.

If you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.

Simply answer a few questions about your savings, retirement timeline and overall investment portfolio.

From there, WiserAdvisor reviews its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.

You can then schedule no-obligation consultations with your matches to determine who is the best fit for your long-term goals.

WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Fortune (); Bureau of the Fiscal Service (); Federal Reserve Bank of Minneapolis (); S&P Global (); Christie's ()

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.