Is the United States Insolvent? (What the Numbers Actually Say)

So I came across a headline a couple of weeks ago that caught my attention. It said the United States is insolvent.

Now, I’m sure some people saw that and just rolled their eyes. “Yeah, okay, here we go again. Another doomer headline," and yeah, I get it. But here’s the thing: the article was actually written by Steve Hanke, not some random guy on YouTube.

And when I looked at what he was saying and, more importantly, what the actual numbers were, it kind of bothered me because as an accountant, I’m used to looking at financial statements. That’s what I do. Balance sheets, assets, liabilities, what you owe, and what you own.

And I started thinking, if a client walked into my office and handed me a balance sheet that looked like the US government’s, would I tell them they’re financially healthy? No. Not even close.

So in this video, I want to slow it down and walk through this the way I would if it were a real client or a business I was thinking about investing in. No politics, no drama, no fear tactics. Just what do the numbers actually say? And more importantly, what does insolvent even mean, especially when we’re talking about the United States?

What Insolvent Actually Means

The word “insolvent” gets thrown around a lot, and it sounds dramatic, but in accounting, it’s actually very simple.

"Insolvent" just means this: you owe more than you own. That’s it.

If your liabilities—that's what you owe—are greater than your assets—that's what you own—then you’re technically insolvent. That’s Accounting 101.

Now, in the real world, if a business is insolvent, that’s a big problem because eventually creditors want to get paid. Banks start asking questions, lenders tighten up, and things get uncomfortable real fast.

And if it keeps going, that’s when you start hearing words like bankruptcy, restructuring, and liquidation. That’s how it works for everyone else.

So when I read the article from Professor Hanke and he’s saying the United States is insolvent, he’s not trying to be dramatic. He’s applying that same basic definition to the United States' balance sheet.

What do they own versus what do they owe?

And that’s when things start to get interesting.

What the Numbers Actually Say

All right, let’s look at this the way I would in my office.

On one side, you’ve got assets—what the United States owns—cash, monetary assets, inventory, and related property and things like that. And based on the Treasury’s own financials, you’re looking at roughly $6 trillion.

Okay, now let’s go to the other side—liabilities, what the United States owes.

And this is where things start to get a little uncomfortable because depending on how you measure this, you’re looking at almost $50 trillion on the low end to well over $100 trillion. That is when you start including things like long-term obligations like Social Security and Medicare.

So we’ve got $6 trillion in assets versus $50 trillion, potentially over $100 trillion, in liabilities.

And as a professional accountant, when I see that kind of range, that tells me one thing. The United States has made a lot of promises that aren’t fully funded.

Now, however you slice it, whether you take the low number or the high number, it’s not even close.

If a client handed me this balance sheet, I’m going to say, “You’re underwater. You’re insolvent.” And not by a little.

Now, does that mean the United States is about to go bankrupt? No. But it’s not good.

On page eight of their executive summary, they say it right there: the current fiscal path is unsustainable.

From a pure accounting balance sheet standpoint, the United States is underwater, and that’s the reality.

Would You Put Your Money Into This?

Alright, so let’s take this out of theory for a second.

Let’s say this wasn’t the United States. Let’s say this was a mega global corporation, and you’re thinking about investing your money into it. Maybe it’s a stock. Maybe it’s a business opportunity. Same idea.

So you sit down, you look at the financials, and what do you see?

You see a company with a relatively small asset base compared to a massive and growing pile of liabilities. You see a company that keeps borrowing more money year after year just to keep things going. You see interest expense climbing faster and faster and no real plan to pay any of it down.

So let me ask you, would you invest in that?

Now, to be fair, there are real reasons why people do invest in the United States. It’s got a relatively strong economy for now. It’s got the world’s reserve currency, and it has the ability to tax.

And yeah, it can print unlimited money.

But let’s be honest about what that really is. That’s not really strength. That’s leverage.

That’s a company that has access to a very powerful credit line and a money-printing press. And as long as that works, things keep moving.

But that doesn’t change the underlying reality. The balance sheet is still upside down, and that has consequences.

The Government Isn’t a Business

Now, I can already hear it.

“Yeah, but Noel, the government isn’t a business.”

You’re right, it’s not.

A business runs out of money, it goes bankrupt, game over. The government plays by a different set of rules. It has the power to tax and levy. It can borrow seemingly as much as it needs, and it can print money.

So no, the United States isn’t going to wake up tomorrow and file Chapter 11.

The US won’t go bankrupt in the traditional sense, but it will make your money worth less over time. And that’s the part people miss.

That doesn’t mean there aren’t any consequences.

In a business, insolvency shows up as bankruptcy. In a government, it shows up differently. It shows up as inflation. It shows up as higher taxes. It shows up as your money not going as far as it used to.

Your grocery bill goes up, your insurance goes up, your property taxes go up, and your paycheck doesn’t keep up with the rising costs of just about everything.

That’s what this looks like in the real world—a lower standard of living.

And I think deep down a lot of people already feel this. They just haven’t connected the dots back to the government’s balance sheet.

Where Does This Leave Us?

So is the United States insolvent?

From a pure accounting definition standpoint, yes, it absolutely is.

Now, does that mean everything collapses tomorrow? No. But it does mean this: the United States is not operating from a position of strength any longer, in my opinion.

They’re operating on momentum, on borrowing, and on the assumption that this can just keep going on and on, business as usual.

And maybe it does for a while.

But as an accountant, I’ve seen how this story plays out in business. You can only outrun a bad balance sheet for so long. At some point, something has to give.

And when you’re a government, that doesn’t just mean inflation. It means the rules will need to change.

Benefits like Social Security, Medicare, and even pensions will need to be adjusted. Eligibility will likely shift higher. Promises, they’ll get reworked—not all at once, but over time.

And I believe that’s how this plays out. Not with an overnight collapse, but with a slow grinding reset that most people won’t ever see coming.

The conclusion to the executive summary of the US government’s financial report says the same thing:

“Projections in the financial report indicate that the government’s debt-to-GDP ratio is projected to rise over the 75-year projection period and beyond if the current policy is kept in place. The projections in this financial report show that the current policy is not sustainable.”

And if you want to go even deeper, know this: the United States Department of Defense has not passed a financial audit every single year. It’s kind of shocking if you think about it. You can learn more about this in my YouTube video linked here.

What do you think? Is the United States truly insolvent, or is this simply how modern governments operate today?

Head over to the YouTube video and share your thoughts in the comments section. Agree or disagree, I’d love to hear your perspective on where the economy, inflation, and the US financial system are headed next.