The United States is Racing Towards the Inescapable Death Trap of Debt Default
On September 5, 2023
The United States is hurtling towards an imminent collapse of its financial system, and time is running out. Do not be fooled by the currently rising stock markets, low unemployment, rising GDP, and declining core inflation statistics. All of these economic indicators will dramatically reverse over the coming months. These are the last dance-party moves on the proverbial Titanic as the waters engulf level after level of a sinking ship.
Given that our entire global monetary system is based on debt, the only thing to watch is the Bond Markets. As Central Bank interest rates continue to rise, all debt payments become increasingly more difficult to maintain. This includes government sovereign debt (Treasury Bonds), business debt (corporate bonds), commercial real estate debt, home mortgage debt, and credit card debt.
The stakes are high, and the consequences will usher in a total monetary system reset.
The following article is a breakdown of complex information, presented in a bulleted format, to help you better understand the critical situation currently unfolding in real time. It’s important to comprehend the impending crash of the fiat currency debt system and the inescapable death trap of financial death approaching.
Key Events in the USA’s Recent Financial Trajectory
- The Fed bailed out the repo markets to the tune of hundreds of billions per week.
- The Fed was printing inflationary money quicker than Nolan Ryan’s fastball.
- America’s debt costs (interest expenses) skyrocketing into an unsustainable $ trillion/year category.
- The U.S. has a $33 trillion bar tab.
- Yields on US 10-Year USTs rose, impacting the interest expense on Uncle Sam’s debt.
- UST supplies (and hence yields) were climbing at a rate not seen in 55 years.
The United States is hurtling towards an unprecedented debt death trap, analogous to a college frat boy recklessly spending on his rich uncle’s credit card. The nation’s ever-increasing deficit spending, rising interest rates, and mounting debt burdens are setting the stage for an inevitable crash of the fiat currency debt system.
Here is a summary of the dangerous trajectory the United States is on,
Deficit Spending and Rising Debt
- The United States’ deficit spending is skyrocketing, akin to a frat boy’s extravagant party lifestyle fueled by unlimited credit.
- The short-term benefits of deficit spending are overshadowed by long-term consequences that take time to manifest.
- The growing deficits and debt burdens are pushing the nation closer to the edge of a debt default.
Rising Interest Rates and Fiscal Dominance
- As GDP rises, the Federal Reserve’s response of hiking interest rates resembles the beer-goggle effect, blinding them to the reality of the situation.
- The irony of the Fed’s attempt to combat inflation through rate hikes is that it often results in more inflation, leading to a case of “fiscal dominance.”
- Rising rates not only stimulate short-term economic growth but also contribute to skyrocketing interest expenses on the nation’s debt.
The Inevitable Monetary Response
- The need to cover mounting deficits by printing trillions of dollars out of thin air becomes increasingly evident.
- This excessive money printing, intended to avoid a debt catastrophe, sets the stage for an inflationary spiral.
- The tragic predictability of this response mirrors historical failures, akin to Pickett’s failed charge at Gettysburg.
Stagflation Looms Ahead
- The likelihood of stagflation, a combination of inflation and stagnant economic growth, is becoming a future certainty.
- Rising bond yields and rates will have deflationary effects on risk assets (stocks and foreign currency exchange trading), while Main Street economies struggle to refinance their loans previously acquired at much lower interest rates.
The US Dollar’s Fate and the Bond Market
- The USD, like the stern of the Titanic, is on a trajectory from a temporary pause to a rapid descent towards the bottom.
- The bond market, with yields acting as approaching shark fins, holds crucial implications for the USA’s fiat system financial stability.
- Ignoring these looming dangers in favor of distractions only exacerbates the risks posed by the impending crash.
The United States finds itself hurtling towards an inescapable debt collapse, similar to a frat boy’s reckless spending spree. The combination of deficit spending, rising interest rates, and mounting debt burdens creates a dangerous trajectory. As we race towards an inevitable crash of the fiat currency debt system, it is crucial to acknowledge the severity of the situation and take proactive measures for the events ahead.
Supporting article: https://goldswitzerland.com/rising-gdp-rising-yields-a-major-sign-of-uh-oh/
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