America's Real Economic Crash

Observation #4: An Ever-Growing Interest Expense Fuels the Debt Spiral

Annualized interest on the Federal Debt exceeds $1.2 Trillion and is surging higher. That means more than 23% of Federal Tax Revenues is going just to service interest on the existing Debt.

Ray Dalio is one of the world’s most successful hedge fund managers due to his consistent ability to get the Big Picture right. He recently said:

"We are at a point in which we are borrowing money to pay Debt service.

When you keep having Debt growth faster than Income growth, that means you have Debt service encroaching on your Spending, and you want to keep spending at the same time.

As that happens, there is a need to get more and more into Debt. It accelerates.

We are at the point of that acceleration. We are near that inflection point."

The Financials of the US Government deteriorated for decades, it’s not surprising that many people are complacent. They’ve heard about the Debt problem, and nothing happened.

However, it's now reaching the tipping point because the US Government is borrowing money to pay the Interest on the money it already borrowed, as Dalio noted. Politicians are adding more Debt to solve the problems of prior Debt.It’s creating a self-perpetuating Doom loop.

The Federal Debt Interest cost is already higher than the Defense Budget. It’s on track to exceed Social Security and become the biggest in the Federal Budget. The skyrocketing Interest expense has become anurgent threatto the US Government's solvency.

Observation #5: Surging Interest Expense Forces Fed To Ease Monetary Policy

The soaring Interest expense threatens the solvency of the US Government and forces the Federal Reserve to cut Interest Rates, buy Treasuries, and implement other Monetary easing measures to try to control Interest Costs.

In the Bond Market, when demand for a Bond falls, the Interest Rate rises to entice Buyers. However, the Federal Debt is so extreme that allowing Interest Rates to rise high enough to entice more natural buyers could bankrupt the US Government because of the higher Interest Costs.

For context, when Paul Volcker raised interest Rates above 17% in the early 1980s the US Debt-to-GDP Ratio was around 30%. Today, it’s 123% and rising rapidly.

Today’s higher Debt and accompanying Interest expense are why meaningfully higher Interest Rates are not on the table; the growing Interest expense will bankrupt the US Government completely.

That's the reason Donald Trump stacked the Federal Reserve with loyalists who'll push for lower Interest Rates and pursue easy-money policies.

The World doesn't want US Debt. It's an inopportune moment for lackluster demand because supply is exploding higher.

If higher Interest Rates are off the table and cannot entice more natural buyers, and Foreign Governments aren’t going to step up to the plate, Who will finance these growing Multi-Trillion Dollar Budget Deficits, you ask?! The Federal Reserve, which buys Treasuries with Dollars it creates out of thin air.

Observation #6: Ever-Increasing Currency Debasement Is Inevitable

The skyrocketing Interest expense forces the Federal Reserve to implement Interest cost control policies, which inflate the money supply and debase the Currency.

As that happens, Prices Rise.

That causes the US Government to spend more on Welfare to keep up with the Cost-of-Living increases. The same with Defense and other Government Spending, adjusting upward for rising prices.

Former Secretary of Defense Robert Gates recently said, "Barely staying even with Inflation or worse is wholly inadequate. Significant additional resources for defense are necessary and urgent."

This compounds the problem as Government Spending rises to account for rising prices, increased spending can only be financed with more Currency Debasement.

That’s why ever-increasing Currency Debasement is the inevitable outcome of the US Government's Debt spiral.


In short, the only way the US Government can continue to finance itself is for the Federal Reserve to create ever-increasing amounts of fake money.

It brings to mind the phrase: "You can’t taper a Ponzi scheme."

Financial commentator Max Keiser originally said these simple yet profound words.

A Ponzi Scheme is an unsustainable Scam that relies on a continuous influx of new money to keep it going.

The Scheme collapses if the flow of new money slows down or tapers.

Many believe the Federal Reserve is running what amounts to a giant Ponzi Scheme.

That’s because the US Government's obscene Spending and skyrocketing Debt have reached an inflection point.

The whole System will collapse unless the Fed pumps an ever-increasing amount of new fake money into the system.

It’s like being on a runaway train with no brakes.

Ludwig von Mises, the godfather of free-market Austrian Economics, summed up the Fed’s dilemma:

"There is no means of avoiding the final collapse of a boom brought about by Credit expansion.

The alternative is only whether the Crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the Currency system involved."

The US Government will not voluntarily "abandon Credit expansion," as Mises puts it, because Washington is dependent on issuing increasing amounts of Debt to pay for the ever-growing costs of Social Security, National Defense, Welfare, and interest on the Federal Debt.

That means their only choice is to debase the US Dollar by ever-increasing amounts until, as Mises puts it, the "final and total catastrophe of the Currency system involved."

It’s like a drug addict who needs to keep raising his dose to get the same effect… until he dies of an overdose.

If this Debt spiral keeps accelerating, the people who understand what’s coming and position themselves early may have a rare chance to protect—and potentially grow—their Wealth while others are caught off guard.

This matters now.

If Washington can’t cut Spending, can’t stop borrowing, and can’t afford higher Rates, there’s only one path left: more Money Creation.

That's the real endgame of the Debt spiral.

As Deficits grow and Interest costs explode, the Federal Reserve is pushed toward more easing, more Treasury support, and more Currency Debasement...

Something doomsayers like this can never answer...how come it hasn't happened already?

Since the 1980's, with the exception of the late 90's, we have run a budget deficit.

People like you claimed the next crash would be the one to wipe us out...yet we recovered from the recessions of 2001, 2008, and the Covid debt expansion of 2020.

Why hasn't it happened already?

If it does, who replaces the US as the world fiat currency? China? The EU? Japan? Russia?

You guys are like the climate people with the doom predictions all the time.

I think you just want attention.

Half of the US debt ( at least) is due to democrat corruption in the government.

And Trump has cut our debt in half with the tariff proceeds.

This obsession the right has with RePaYinG tHe DeBt, especially while being clueless about how debit works for a country (hint: it's not the same as a private citizen or a company taking a loan, but rest assured you'll never get it, at least not with a full stomach) has fked literally every country that tried it, but the lesson is never learned lol

It's fked the UK, it's fked half of Europe, and the USA is next on the chopping block. Especially hilarious as those who were voted to "fix" the debt are making it even worse, at least here they had the decency to to look «responsible» lol

I I have been saying all this for a decade now. And there is more.. The government has been manipulating the rules to 'encourage" or regulate the Banks, major investment institutions and pension funds all increase their carrying of Treasury investments to offset the selling being done by foreign governments. This means that as the value of these investments decline, so will the value of banks as investments. We have already seen this with the Silicone Valley Bank collapse. But much more importantly, will be the collapse of major pension funds, as their drawdown exceeds their profits time after time, making them look like giant Ponzi schemes. The alternative is to freeze the payout levels, allowing inflation to erode their purchasing power. So there is no good way out of this.😷

The US has problems no doubt. Most of it can be traced to the Pentagon which has never passed an audit and cannot account for 63% of their assets. The defense industry is literally a criminal cartel used for fraud first and foremost.

Dr. Richard Wolff would have a stroke at his name being used to push the long debunked austerity ideology though.

Even the IMF has publicly stated austerity is bs despite pushing it for decades.

It just makes people at the bottom suffer for the actions at the top.

And close 128 based? The US has between 700 to 1000 bases depending on what you include.