The US is insolvent and quickly speeding toward bankruptcy. The astonishing, near-vertical rise in US government interest payments is an example of the exponential function “in the last five minutes” as we say here at Peak Prosperity.
This is based on my stadium-filling-with-water example which I cover again because from time to time everybody needs a refresher on this all-important topic including me.
On Twitter, somebody was shocked by data showing that over the past 6 years the world has consumed 75% of the amount it had consumed over the entire 20th century, and went on to suggest we had an overconsumption problem:
What we actually have is an exponential growth problem. One rooted in the ‘necessity’ of our debt-based money system having to grow exponentially all the time. This is leading to the box-canyon of a math problem that is now upon us, as predicted by yours truly over the years.
Back to the story. Every bankruptcy proceeds the same way; slowly, then all at once.
Here’s the shocking data:
(Source)
Well, maybe not all that shocking to those of us who have been tracking this warily over the years, but it’s certainly on a brand-new trajectory this year.
I think it’s actually underselling it a bit because according to the Treasury Monthly Statement (MTS) the May expenditure for interest expense was $103.045 billion which annualizes out to $1,236 billion.
(Source)
The twin drivers for all these “sudden” expenditures are the Fed’s rate hikes and the exponential increase in debt carried by the US government, which the Heritage Foundation summarized like this:
(Source)
This is an exponential increase. We’re in the last five minutes of this story. The water is rushing up the stairs.
The Fed has to choose between one of these two options:
- Save the dollar
- Save the bond market
They cannot do both. Sacrificing the dollar means inflation rips apart the lives of the lower classes. Sacrificing the bond market means the government that provides the Fed with its protection racket goes away. This would prevent the Fed from printing currency that it hands over mainly to Wall Street firms which serves to steal purchasing power from everyone while obscenely enriching a very small cadre of insiders.
So the prediction is easy to make; the Fed will “save” the bond market. It will do this by printing up more currency which it will use to buy however many US Treasury bonds it must to maintain the illusion of robust demand for US government paper. At this stage that amount is “whatever is necessary to keep the interest rates low enough that the US government can continue to exist.” It’s going to be a really big number.
Even the Congressional Budget Office has thrown in the towel of responsibility on the matter concluding that the Fed will have to engage in a monstrous balance sheet expansion project, which means “more printing.”
https://x.com/jameslavish/status/1803189960750801191
Bottom Line: Get ready for inflation. LOTS more inflation!
Eventually, the Fed will fail at this too, which means we have to move onto the second part of today’s scouting report which covers the fact that the many foot soldiers of the Collectivists are going to be in for a rude awakening when they find themselves lucky if they are merely abandoned and lined up against the wall if they are not.
Welcome to the ‘all at once’ stage.