What happens when we lose the game of chicken with reality.

Right now, we pay hundreds of billions of dollars every year in interest on our existing debt—money that might otherwise go to roads, schools, or perhaps paying down the principal. Take a time machine back a decade or two, and we’d see a smaller absolute debt. Ten, twenty, thirty years ago, our debt in today’s value was a fraction of the current sum. But each era found its own justification to borrow a little more. As we soared from $10 trillion to $20 trillion, people wondered if $30 trillion was the limit. Then we breezed past $30 trillion. Will $40 trillion be a new milestone? $50 trillion? Or maybe $100 trillion? Why not?

It’s comical.

On one side, we keep jacking up spending, whether it’s defense, decreasing taxes for the rich or stimulus packages or something else. On the other side, we can’t conceive of raising taxes enough to balance it all. And in the middle, our retirement surpluses, once upon a time, calmly bought our own bonds, enabling the spree to continue. The net result: we keep expanding the tab. Some economists say, “It’s fine, we’re the reserve currency, plus inflation and GDP growth will help.” Others ask, “Wait, are we sure that if we owe ourselves and everyone else $60 trillion or $100 trillion, the music will keep playing?”

We can stare at the interest line item: that’s real money leaving our pockets each year just to service the debt we bought from ourselves disguised as treasury bonds.

Next year, we’ll spend more on interest than we spend on certain big federal agencies combined. Over time, as the debt keeps doubling while interest rates inevitably fluctuate, it will start devouring the budget. Could we keep paying that if the principal soared to $60 trillion? $80 trillion? Or, for dramatic effect, $200 trillion? Possibly yes, as long as we continue to find buyers for our debt (including ourselves in that twisted loop), and as long as interest rates remain manageable.

Of course, in normal households, like mine and probably yours, we can’t keep borrowing and paying interest from more borrowing forever. But hey, we’re told we’re special. We can fling around new treasuries daily, trusting that the world (and we ourselves) will just keep snapping them up.

In a sense, we’re the ultimate “I owe me” success story.

But from a straightforward economic perspective, we should ask, if eventually we lose the game of chicken with reality, If interest rates spike and we’re carrying $60 trillion or $100 trillion, that interest alone could swallow half the federal budget, leaving everyone squabbling over scraps.

Yet each time the debt grows from, say, $10 trillion to $30 trillion, we come up with a brand-new rationale to reassure ourselves. The question is whether that logic still holds at $50 trillion, or $80 trillion, or some mind boggling figure further down the line. 30 trillion was unthinkable 20 years ago.

We can keep talking about “percent of GDP,” “reserve currency,” “unlimited borrowing capacity,” but at some level, the math is the math: more debt means more interest. We can obscure or postpone the costs, but we can’t vaporize them entirely.

Which is why we circle back to the systemic madness: we rely on our own retirement system to keep interest rates from flying off the handle, funneling our own payroll taxes into the same pot that’s already overflowing with IOUs. Meanwhile, we chatter about deficits, yet rarely do we adopt fundamental reforms. If we did stop the printing of new IOUs or mandated that we can’t exceed a certain level of debt, the system might suffer a rude awakening. But for now, we soldier on.

The debt ceiling is just there for show and something incompetent politicians can threaten to not increase.

It’s all a charade.

So how much debt can we handle: $60 trillion, $100 trillion, or the entire Universe’s GDP? It’s anyone’s guess. Perhaps we’ll shuffle resources among ourselves for decades, staving off crisis. Or perhaps at some trillion dollar threshold, let’s say half a quadrillion (for shits and giggles) dollars we face a meltdown.

By then, maybe interest rates eat so much of our budget that we can’t sustain normal operations. Or maybe we devise a new cunning approach: keep piling IOUs onto the next generation, and they can pay interest to themselves using their own future kids’ Social Security surpluses.

The possibilities are endless.

At day’s end, balancing a budget, personal or national, hinges on not spending more than we earn. We might defy that logic for a while, especially if we can keep re-hypothecating everything we have. But funny or not, we do pay interest on each step of that ride. If that interest crosses a tipping point, it crowds out everything else we might want to fund. If we keep doubling the principal, we further sabotage ourselves. From that vantage, it’s fair to say the debt absolutely “matters.” It’s not an abstract figure, it’s literal money that we, collectively, owe. And each time we add another trillion, the balancing act intensifies: we pay interest to ourselves using money we extracted from ourselves to offset prior deficits… all while scrounging around for more lenders to help keep the show going.

If it seems insane, that’s because it probably is. But so long as we can pin the blame (and the bill) on tomorrow, we march forward. The real question is: how many tomorrows do we have left until this money shuffling routine becomes the tragedy we saw coming?