Category: simonblack

“In the present position of Europe,” Napoleon wrote to his ambassador in Constantinople, “all my thoughts are directed towards England. . . nearly 120,000 men and 3,000 boats. . . only await a favorable wind to plant the [French flag] on the Tower of London.”

That was written in March 1804. And to be in Britain at the time– knowing that Napoleon was planning an invasion– must have been terrifying.

Britain was already a complete mess by 1804 anyhow:

1) There had been a terrible currency crisis only a few years before, prompting the government to suspend the gold standard. The end result was several years of nasty inflation which topped out at nearly 15%. People were furious.

2) Britain’s defeat in the American Revolution was not only a national humiliation, but incredibly costly; the national debt had soared, and government spending was still out of control by 1804. Taxes rose as a result, including a new income tax that was introduced in 1798.

3) British banks, including the infamous Barings Bank, were found to have indirectly provided loans to France… essentially helping to finance Napoleon’s planned invasion of Britain.

4) And to cap it all off, King George III was widely viewed as insane by contemporary physicians and had multiple bouts of delirium.

A mad king. Inflation. Out of control deficit spending. Steep taxes. Idiotic bankers. A looming invasion. It must have felt like very dark days in Britain in the early 1800s.

And yet they did find their way out from the depths of despair to eventually achieve unprecedented peace and prosperity.

Britain’s incredible reversal took time. Years. But eventually they defeated their enemy. They paid down their debt. They strengthened the currency. They remained the world’s dominant superpower. And they enjoyed a massive economic boom that lasted for decades.

I’ve written about this before because, frankly, it’s one of the few examples in history of a country abruptly reversing course and going from almost certain decline to unbelievable prosperity.

And I think it’s clear that the US is in this position right now.

Enemies are swarming around the world… including passionate ignoramuses within the US who seem hellbent on making the country weaker.

Wealthy activists like George Soros, for example, fund the political campaigns of ‘progressive prosecutors’ who release criminals onto the streets and refuse to prosecute crimes.

Combined with the geniuses in many city councils across the country who have de-funded their police departments and decriminalized shoplifting, the unsurprising result has been an alarming rise in crime.

Meanwhile, the people running the federal government roll out the red carpet for illegal migrants at the southern border, creating total chaos in most major cities.

They constantly issue idiotic regulations and legislation which make life more cumbersome and expensive for average Americans and small businesses– like the Labor Department’s recent 800-page proposal to make sure that interns can use a toilet which conforms to their gender identity.

Enemies are at the gate. And in some instances, including through repeated cyberattacks and other incursions, enemies have already breached the gate.

Yet the people in charge have weakened the military between their vaccine mandates, the humiliation of Afghanistan, and endless diversity & inclusion efforts. Recruiting and mission readiness are now both at historic lows.

They weaponize the justice system against their opponents and soften it for their friends and family. Rule of law has become a total joke, especially now that even high-ranking judges have become social activists whose rulings reflect their woke fanaticism rather than Constitutional law.

They suppress intellectual dissent and denounce those who disagree with them as “cave men”, “white supremacists”, “threats to democracy”, or “science deniers”. And their propaganda machine masquerading as mainstream journalism constantly feeds us these lies with a straight face.

They refuse to even acknowledge the looming fiscal crises they’ve engineered through decades of deficit spending and expensive entitlement programs. The country is only a few years from a financial cliff, yet they’re not even talking about it.

And to top it all off, the guy in charge appears to have lost his mind… just like King George III.

These are the circumstances of America today. And in many respects, they are similar to Britain in the early 1800s.

Could there be a similar, miraculous turnaround for the US? Is it possible that, ten years from now, America is firmly the world’s superpower with a booming economy and negligible debt burden?

Yes, absolutely. There is still a very narrow path forward.

It would include a complete overhaul of Social Security, plus deep cuts to expensive welfare programs which cost over $500 billion dollars each year.

I’d also anticipate a major asset sale to raise cash (and avoid going further into debt), i.e. an auction of millions of acres of government land.

It would also require serious de-regulation, which, combined with AI, could radically boost the economy, and create a productivity boom. This would not only increase economic prosperity, but also increase tax revenue and reduce the deficit.

These are just a few, extremely high-level points to illustrate that it is possible for the US to reverse course, just like Britain did in the early 1800s.

But the path to recovery is very narrow. And short. There simply isn’t much time remaining.

I’ve written before that the US probably only has around five years, if not less, before the government reaches the end of its financial rope. The national debt and entitlement spending are simply too high.

By the early 2030s, the only realistic way to ‘solve’ the fiscal problem will be full-blown default… on the national debt, on Social Security, and on just about everything else.

So, yes, there is a chance this problem can be fixed. But at the moment, I objectively see very little evidence that there’s any appetite to even discuss these problems, let alone make the difficult decisions to solve them.

And this is why it makes so much sense to have a Plan B.

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That infernal clanging you might have heard outside your bedroom window this morning was the sound of the proverbial can being kicked down the road, yet again.

With no agreement on spending anywhere on the horizon for the current fiscal year, the US Congress passed yesterday a ‘Continuing Resolution’ to keep the government temporarily funded for another six weeks.

This is nothing new; in fact, Congress has passed more than 50 Continuing Resolutions just since 2010, primarily because they almost NEVER manage to figure out the budget prior to the start of the fiscal year on October 1st.

But now there is far greater need to get it right than ever before.

I’ve been writing about this a lot lately, because, frankly, it is a critical issue. Failing to fix the spending problem spells disaster for the United States… and for the US dollar.

I wrote recently how the Congressional Budget Office projects the US government will add $20 trillion to the national debt through 2033.

$20 trillion is an absurd amount of new debt. And there are very few groups and institutions capable of loaning such a vast sum of money.

Social Security, for example, was one of the biggest buyers of US government bonds for several decades. And at this point they own roughly $3 trillion of the national debt.

But Social Security is now bleeding so much money that the program is no longer able to loan the Treasury Department any more money.

Foreigners also used to be highly reliable buyers of US Treasury bonds; even as recently as a few years ago, foreign ownership of US federal debt was more than 33%.

But foreigners are rapidly losing their appetite for US government bonds, and their ownership has plummeted to 22% very quickly.

Now, in many ways it’s good that the US no longer owes so much of its debt to foreigners.

Except that this only leaves one reliable institution remaining to buy up all that new debt: the Federal Reserve.

Remember, the Fed’s unelected Federal Open Market Committee (FOMC) holds periodic closed-door meetings to make decisions about the US money supply.

When they expand the money supply, they give it a very technical sounding name (like “Quantitative Easing”). But ultimately what this means is that they conjure trillions of dollars out of thin air with the click of a button.

It’s actually quite bizarre when you think about it; they make a few entries into an electronic ledger, and, poof, new money exists.

(It’s essentially the electronic version of having a printing press, which is why we often just say that the Fed ‘prints money’.)

The Fed then lends that money to the federal government, and the mechanism for this is buying US Treasury bonds.

Because the Fed has this special ability to print money– something which no one else is legally allowed to do– there is realistically no limit to how many bonds they can buy. If the government needs to borrow $20 trillion, the Fed has the capacity to print and lend $20 trillion.

And this is the key issue: when individuals, corporations, or even foreign governments buy US Treasury Bonds, they are buying those bonds with existing money that’s already in the system.

But when the Fed buys US Treasury Bonds, they do it by conjuring new money out of thin air.

And this new money creates more inflation.

This isn’t some wild theory; we all experienced the effects firsthand during the pandemic; the US government spent so much money in 2020 and 2021 that the national debt increased by more than $6 trillion.

The Fed created about $4 trillion of new money to buy the biggest chunk of that debt. And the end result of so much sudden, new money was 9% inflation.

So, if $4 trillion in new money caused 9% inflation, how much inflation will $20 trillion create? No one can predict the effect precisely, but it probably won’t be zero.

Remember, this $20 trillion figure for new debt is the government’s own forecast over the next ten years (and it might be on the low side).

But most of this amount, i.e. $15+ trillion, will accumulate over the next 5-7 years. So this is really the time frame for increased inflation risk… and serious threats to the US dollar.

Because with an explosion in US government debt– and renewed inflation– there is a very strong chance that foreigners will finally demand a change.

The United States and the US dollar have been in command of the global financial system ever since the Bretton Woods Agreement was signed at the end of World War II.

This agreement made the US dollar the world’s dominant reserve currency, forcing every nation, every major bank, every large corporation to hold US dollars for international trade and financial transactions.

The dollar’s reserve status is a very special privilege for the United States. But if the world finally demand a new, de-dollarized system, then foreigners would no longer need to hold US dollar assets– including US government bonds.

Even though foreign ownership of US debt is already dwindling, losing reserve status would cause that percentage to drop very quickly. And the Fed would need to print even more money to make up for the loss of foreign investors… causing even more inflation.

Now, I’ve written before that, at least for the moment, there are still a handful of ways that the US could navigate out of this mess. But options are narrowing and the window to act is closing.

Watching Congress kick the can down the road yesterday, yet again, rather than make tough decisions or even DISCUSS necessary actions like entitlement reform, etc. does not give me much confidence that they will figure this out.

And if no action is taken, the scenario I outlined above is likely to play out over the next 5-7 years.

Fortunately, this gives every intelligent, independent-thinking individual a healthy window to prepare for what’s coming.

What I wrote above is not the end of the world. I am not predicting doom and gloom. I am, however, making a strong case for an inflationary future.

But there is plenty we can do now to prepare so that future inflation won’t have a significant impact on our lives.

Energy prices, for example, could likely soar. And yet many energy producing companies are remarkably cheap right now. This is a pretty good hedge.

Gold is also worth discussing; even though it’s near an all-time high, there’s a good chance that the future financial system I mentioned earlier becomes based on gold, rather than any single currency.

And if that happens, we could easily see $10,000 gold or more, likely by the end of the decade.

More on that soon.

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Tony Fauci should be in a prison cell in Wuhan right now given how much responsibility he bears for destroying US government finances.

This guy was one of the chief architects of the hysteria that took over the US (and much of the world) back in 2020.

Yet he now admits, according to recent Congressional testimony, that his infamous six-foot social distancing edict “sort of just appeared” and was “not based on any data”.

But it was precisely those sorts of claims that prompted politicians to close schools and business across the country, and to pay people to stay home and NOT work.

The financial results of this insanity are clear; the US national debt increased by an unbelievable $6.5 trillion during 2020 and 2021. And while there is a lot of blame to go around– politicians had ample time to find their intellectual courage– Fauci is extremely culpable.

Now, the US fiscal situation was already in bad shape prior to 2020. I remember back in 2019, when the economy was booming and federal tax revenue was at a record high, the US national debt STILL increased by more than $1 trillion that year.

And I wrote to our readers wondering– if the United States government still manages to add $1 trillion to the national debt when everything is awesome, what’s going to happen when there’s a real emergency?

Well, Tony Fauci gave us the answer the following year.

But even now that Covid is over, government overspending is still extreme. And it’s not getting any better.

I’ve been writing about this a lot lately, but today I need to explain where this is headed, and why it’s so inflationary.

Consider that, according to the Congressional Budget Office’s own forecasts, the United States will add another TWENTY TRILLION DOLLARS to the national debt through 2033.

Now, 2033 is a REALLY important date, because it also happens to be the year that Social Security’s primary trust fund completely runs out of money.

Social Security is funded in large part by workers who contribute a portion of their paychecks into the program through the FICA/payroll tax.

Social Security uses that tax revenue to pay monthly benefits to retirees across the country. And any surplus left over is rolled into a special trust fund.

Over time, the accumulated surplus in the trust fund amounted to roughly $3 trillion dollars; and all that money was invested in interest-bearing government bonds.

Between the payroll tax contributions and the trust fund’s interest income, Social Security always ran a healthy surplus.

Until recently.

Starting in 2020, there were so many retirees receiving Social Security benefits that the program barely broke even for the year.

The following year, 2021, was even worse. Social Security ran a deficit for the first time ever and had to dip into its trust fund to make ends meet.

This trend kept up in 2022 and 2023 as well. In fact, the program loses so much money now that its trust fund is shrinking rapidly, and Social Security projects it will fully be depleted by 2033.

One of the many, many reasons this is so important is because Social Security will no longer be a BUYER of US government bonds. It will be a SELLER. And that’s a big deal.

For the past 90+ years, Social Security always invested its annual surplus into government bonds… which essentially gave politicians an extra pile of cash each year to spend.

But now this cash flow will reverse. Instead of Social Security sending its surplus to the Treasury, the Treasury Department now must repay the debt that it owes to Social Security.

This nearly $3 trillion repayment will happen gradually over the next ten years. And then, of course, in 2033, Social Security will be out of money and require a multi-trillion-dollar bailout.

Unfortunately, the Treasury Department doesn’t have the money to repay this $3 trillion debt, let alone another $5 to $10 trillion to bail out Social Security.

This means that, in addition to the $20 TRILLION in new debt that the CBO is projecting over the next ten years, the Treasury Department will have to borrow an ADDITIONAL $3 trillion to repay Social Security. And then even more to bail out the program

(So, this means that the government will need to find someone to buy $23++ trillion of government bonds over the next ten years… which is just an absurd amount of money.

And it will have to do this at a time when it has lost some of its biggest investors; again, Social Security can no longer afford to buy bonds. And many of America’s biggest foreign bondholders, including China and Japan, are also not buying any more bonds.

So, who is going to buy all this new debt?

The only realistic option is the Federal Reserve. And this is nothing new for the Fed.

During the pandemic, for example, the Fed magically created about $4 trillion in new money, then used that money to buy US government bonds.

Of course, their $4 trillion in new money also helped create the highest inflation in four decades.

So, if buying $4 trillion of government bonds led to 9% inflation, what’s going to happen when the Fed has to create $20+ trillion to buy government bonds?

And by the way, the CBO’s $20 trillion estimate on new government debt is probably a bit too optimistic. It assumes there will be no new war, no pandemic, no national emergency, and no idiotic legislation that causes even crazier spending.

If any of those were to happen over the next decade, the increase to the national debt would be even higher… meaning the Fed would have to create even MORE money.

$20+ trillion is a ton of debt. And with no other realistic option other than the Federal Reserve to buy that debt, it’s easy to make a very strong argument for substantial inflation a few years down the road.

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Chances are there will never be a formal inquiry about the insurrection of September 30, 2023.

Nancy Pelosi won’t hire a Hollywood producer to stage theatrical prime-time specials showing members of Congress grilling witnesses. The mainstream media won’t constantly wail about it for the next several years. And no one will ever be prosecuted. Ever.

And yet, the video footage is very clear: on September 30, 2023, a domestic terrorist blatantly committed an act of insurrection by attempting to subvert democracy in the Land of the Free.

His name is Jamaal Bowman. And he happens to be a congressman representing constituents in New York City.

That afternoon, Congress was about to vote on a key piece of legislation that would keep the government temporarily funded in order to prevent a shutdown that would have gone into effect only hours later.

But Bowman– and many members of his party– did not want the vote to take place, simply because they wanted to embarrass the opposition.

So, the guy deliberately pulled the fire alarm, causing the building to be evacuated. This isn’t some conspiracy theory– the cameras plainly showed Bowman pulling the fire-alarm, and he admitted to it.

Now, Bowman’s attempt to subvert democracy has been swept under the rug. But he is still finding plenty of new ways to be a complete idiot.

This genius’s latest crusade is to demand that descendants of former slaves receive, “at minimum”, a whopping $14 trillion worth of reparations.

Bear in mind that $14 trillion is more than half the size of the entire US economy, more than three times federal tax revenue. It’s an absurd amount of money… raising an obvious question: where in the world does he think this money will come from?

“Where did the money come from,” Bowman mused, “when Covid was destroying us?”

His answer? “We spent it into existence.”

Ladies and gentlemen, all of America’s financial problems have been solved by the economic mastermind, Jamaal Bowman. We simply have to create the money out of thin air and give it to people according to the wishes of politicians.

Let the good times roll! No one even has to work anymore, the government can just spend money into existence, and, poof, everyone can be rich.

Of course, when the government spent $4 trillion into existence during COVID to pay people to NOT work, we ended up with 9% inflation.

But don’t worry, Bowman says, the MINIMUM $14 trillion he’s proposing doesn’t have to be paid all at once. It could be paid over 5 to 10 years.

Oh. Phew. Well, that makes it so much better.

Of course, since the US government doesn’t actually have $14 trillion, they would of course have to borrow the money– most likely from the Federal Reserve, which would create that money out of nothing.

And this $14 trillion would be in ADDITION to the $20 trillion (which is optimistic) that both the White House and Congressional Budget Office estimate will be added to the US national debt over the next decade.

So, between the baseline $20 trillion in new debt over the next 10 years, plus Bowman’s genius $14 trillion idea, that would be $34 trillion in new debt over the next decade.

Bear in mind that the national debt right now is $34 trillion. So, this idiot is talking about doubling the debt in ten years.

Naturally, though, Bowman doesn’t think there will be any consequences whatsoever.

Now if we’re intellectually honest, Bowman’s idea has no chance of passing. But it does give us a very clear picture of the caliber of people who are in charge.

People like Bowman are inspired idiots. They have absolutely no idea how anything works yet expect the world to conform to their clueless fanaticism.

Amazingly, despite being a certifiable moron, 133,567 voters in the greater New York City area saw fit to elect this guy in a landslide victory.

(That said, Bowman’s district usually has bad taste in elected officials; it also first elected Chuck Schumer to Congress in the 1970s, as well as Charles Rangel— who railed against the wealthy only to be censured for 11 financial ethics violations, including tax evasion.)

There’s a good chance that more inspired idiots like Bowman are on the way.

History suggests that bad economic times and financial crises tend to give fanatical socialists the opportunity to win election.

They promise the world– free money for everyone, no consequences. It’s as ridiculous as the kid who runs for high school class president that promises to put Coca Cola in the water fountains. But plenty of voters are gullible enough to believe the lies.

Ironically, Bowman even acknowledged the stubborn inflation problem– because he said, more than likely, the actual reparation figure will have to be $16 trillion instead of $14 trillion, in order to adjust for inflation by the time the legislation passes.

So while yesterday I wrote that the deep challenges facing the US are still technically fixable… it’s important to point out that America is run by inspired idiots like Jamaal Bowman.

And they simply do not have what it takes to understand the dark problems facing the United States, let alone the ability to pass solutions quickly and rationally.

This guy literally pulled a fire alarm to prevent a critical vote to keep the government funded. And he was cheered by his colleagues.

Does anyone honestly think these people will negotiate like reasonable adults and make the vital, tough decisions to reform Social Security, or cut wasteful government spending?

Does anyone think they will be able to inspire confidence in America as the stewards of the world’s reserve currency? Does anyone trust them to prevent World War III?

So yes, America’s challenges are technically fixable. But with inspired idiots like Bowman running the show, it’s not looking good.

* As a final point, I want to reiterate that these challenges are not the end of the world.

Yes, inflation will likely be very severe in the future. The US dollar’s loss of reserve status will likely have substantial negative effects. And the consequences of Social Security running out of money in 2033 is incalculable.

But given that we can anticipate these risks, we can also do something about it. And taking action now, while there’s still time, can dramatically reduce their impact.

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“In the present position of Europe,” Napoleon wrote to his ambassador in Constantinople, “all my thoughts are directed towards England. . . nearly 120,000 men and 3,000 boats. . . only await a favorable wind to plant the [French flag] on the Tower of London.”

That was written in March 1804. And to be in Britain at the time– knowing that Napoleon was planning an invasion– must have been terrifying.

Britain was already a complete mess by 1804 anyhow:

1) There had been a terrible currency crisis only a few years before, prompting the government to suspend the gold standard. The end result was several years of nasty inflation which topped out at nearly 15%. People were furious.

2) Britain’s defeat in the American Revolution was not only a national humiliation, but incredibly costly; the national debt had soared, and government spending was still out of control by 1804. Taxes rose as a result, including a new income tax that was introduced in 1798.

3) British banks, including the infamous Barings Bank, were found to have indirectly provided loans to France… essentially helping to finance Napoleon’s planned invasion of Britain.

4) And to cap it all off, King George III was widely viewed as insane by contemporary physicians and had multiple bouts of delirium.

A mad king. Inflation. Out of control deficit spending. Steep taxes. Idiotic bankers. A looming invasion. It must have felt like very dark days in Britain in the early 1800s.

And yet they did find their way out from the depths of despair to eventually achieve unprecedented peace and prosperity.

Britain’s incredible reversal took time. Years. But eventually they defeated their enemy. They paid down their debt. They strengthened the currency. They remained the world’s dominant superpower. And they enjoyed a massive economic boom that lasted for decades.

I’ve written about this before because, frankly, it’s one of the few examples in history of a country abruptly reversing course and going from almost certain decline to unbelievable prosperity.

And I think it’s clear that the US is in this position right now.

Enemies are swarming around the world… including passionate ignoramuses within the US who seem hellbent on making the country weaker.

Wealthy activists like George Soros, for example, fund the political campaigns of ‘progressive prosecutors’ who release criminals onto the streets and refuse to prosecute crimes.

Combined with the geniuses in many city councils across the country who have de-funded their police departments and decriminalized shoplifting, the unsurprising result has been an alarming rise in crime.

Meanwhile, the people running the federal government roll out the red carpet for illegal migrants at the southern border, creating total chaos in most major cities.

They constantly issue idiotic regulations and legislation which make life more cumbersome and expensive for average Americans and small businesses– like the Labor Department’s recent 800-page proposal to make sure that interns can use a toilet which conforms to their gender identity.

Enemies are at the gate. And in some instances, including through repeated cyberattacks and other incursions, enemies have already breached the gate.

Yet the people in charge have weakened the military between their vaccine mandates, the humiliation of Afghanistan, and endless diversity & inclusion efforts. Recruiting and mission readiness are now both at historic lows.

They weaponize the justice system against their opponents and soften it for their friends and family. Rule of law has become a total joke, especially now that even high-ranking judges have become social activists whose rulings reflect their woke fanaticism rather than Constitutional law.

They suppress intellectual dissent and denounce those who disagree with them as “cave men”, “white supremacists”, “threats to democracy”, or “science deniers”. And their propaganda machine masquerading as mainstream journalism constantly feeds us these lies with a straight face.

They refuse to even acknowledge the looming fiscal crises they’ve engineered through decades of deficit spending and expensive entitlement programs. The country is only a few years from a financial cliff, yet they’re not even talking about it.

And to top it all off, the guy in charge appears to have lost his mind… just like King George III.

These are the circumstances of America today. And in many respects, they are similar to Britain in the early 1800s.

Could there be a similar, miraculous turnaround for the US? Is it possible that, ten years from now, America is firmly the world’s superpower with a booming economy and negligible debt burden?

Yes, absolutely. There is still a very narrow path forward.

It would include a complete overhaul of Social Security, plus deep cuts to expensive welfare programs which cost over $500 billion dollars each year.

I’d also anticipate a major asset sale to raise cash (and avoid going further into debt), i.e. an auction of millions of acres of government land.

It would also require serious de-regulation, which, combined with AI, could radically boost the economy, and create a productivity boom. This would not only increase economic prosperity, but also increase tax revenue and reduce the deficit.

These are just a few, extremely high-level points to illustrate that it is possible for the US to reverse course, just like Britain did in the early 1800s.

But the path to recovery is very narrow. And short. There simply isn’t much time remaining.

I’ve written before that the US probably only has around five years, if not less, before the government reaches the end of its financial rope. The national debt and entitlement spending are simply too high.

By the early 2030s, the only realistic way to ‘solve’ the fiscal problem will be full-blown default… on the national debt, on Social Security, and on just about everything else.

So, yes, there is a chance this problem can be fixed. But at the moment, I objectively see very little evidence that there’s any appetite to even discuss these problems, let alone make the difficult decisions to solve them.

And this is why it makes so much sense to have a Plan B.

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That infernal clanging you might have heard outside your bedroom window this morning was the sound of the proverbial can being kicked down the road, yet again.

With no agreement on spending anywhere on the horizon for the current fiscal year, the US Congress passed yesterday a ‘Continuing Resolution’ to keep the government temporarily funded for another six weeks.

This is nothing new; in fact, Congress has passed more than 50 Continuing Resolutions just since 2010, primarily because they almost NEVER manage to figure out the budget prior to the start of the fiscal year on October 1st.

But now there is far greater need to get it right than ever before.

I’ve been writing about this a lot lately, because, frankly, it is a critical issue. Failing to fix the spending problem spells disaster for the United States… and for the US dollar.

I wrote recently how the Congressional Budget Office projects the US government will add $20 trillion to the national debt through 2033.

$20 trillion is an absurd amount of new debt. And there are very few groups and institutions capable of loaning such a vast sum of money.

Social Security, for example, was one of the biggest buyers of US government bonds for several decades. And at this point they own roughly $3 trillion of the national debt.

But Social Security is now bleeding so much money that the program is no longer able to loan the Treasury Department any more money.

Foreigners also used to be highly reliable buyers of US Treasury bonds; even as recently as a few years ago, foreign ownership of US federal debt was more than 33%.

But foreigners are rapidly losing their appetite for US government bonds, and their ownership has plummeted to 22% very quickly.

Now, in many ways it’s good that the US no longer owes so much of its debt to foreigners.

Except that this only leaves one reliable institution remaining to buy up all that new debt: the Federal Reserve.

Remember, the Fed’s unelected Federal Open Market Committee (FOMC) holds periodic closed-door meetings to make decisions about the US money supply.

When they expand the money supply, they give it a very technical sounding name (like “Quantitative Easing”). But ultimately this means is that they conjure trillions of dollars out of thin air with the click of a button.

It’s actually quite bizarre when you think about it; they make a few entries into an electronic ledger, and, poof, new money exists.

(It’s essentially the electronic version of having a printing press, which is why we often just say that the Fed ‘prints money’.)

The Fed then lends that money to the federal government, and the mechanism for this is buying US Treasury bonds.

Because the Fed has this special ability to print money– something which no one else is legally allowed to do– there is realistically no limit to how many bonds they can buy. If the government needs to borrow $20 trillion, the Fed has the capacity to print and lend $20 trillion.

And this is the key issue: when individuals, corporations, or even foreign governments buy US Treasury Bonds, they are buying those bonds with existing money that’s already in the system.

But when the Fed buys US Treasury Bonds, they do it by conjuring new money out of thin air.

And this new money creates more inflation.

This isn’t some wild theory; we all experienced the effects firsthand during the pandemic; the US government spent so much money in 2020 and 2021 that the national debt increased by more than $6 trillion.

The Fed created about $4 trillion of new money to buy the biggest chunk of that debt. And the end result of so much sudden, new money was 9% inflation.

So, if $4 trillion in new money caused 9% inflation, how much inflation will $20 trillion create? No one can predict the effect precisely, but it probably won’t be zero.

Remember, this $20 trillion figure for new debt is the government’s own forecast over the next ten years (and it might be on the low side).

But most of this amount, i.e. $15+ trillion, will accumulate over the next 5-7 years. So this is really the time frame for increased inflation risk… and serious threats to the US dollar.

Because with an explosion in US government debt– and renewed inflation– there is a very strong chance that foreigners will finally demand a change.

The United States and the US dollar have been in command of the global financial system ever since the Bretton Woods Agreement was signed at the end of World War II.

This agreement made the US dollar the world’s dominant reserve currency, forcing every nation, every major bank, every large corporation to hold US dollars for international trade and financial transactions.

The dollar’s reserve status is a very special privilege for the United States. But if the world finally demand a new, de-dollarized system, then foreigners would no longer need to hold US dollar assets– including US government bonds.

Even though foreign ownership of US debt is already dwindling, losing reserve status would cause that percentage to drop very quickly. And the Fed would need to print even more money to make up for the loss of foreign investors… causing even more inflation.

Now, I’ve written before that, at least for the moment, there are still a handful of ways that the US could navigate out of this mess. But options are narrowing and the window to act is closing.

Watching Congress kick the can down the road yesterday, yet again, rather than make tough decisions or even DISCUSS necessary actions like entitlement reform, etc. does not give me much confidence that they will figure this out.

And if no action is taken, the scenario I outlined above is likely to play out over the next 5-7 years.

Fortunately, this gives every intelligent, independent-thinking individual a healthy window to prepare for what’s coming.

What I wrote above is not the end of the world. I am not predicting doom and gloom. I am, however, making a strong case for an inflationary future.

But there is plenty we can do now to prepare so that future inflation won’t have a significant impact on our lives.

Energy prices, for example, could likely soar. And yet many energy producing companies are remarkably cheap right now. This is a pretty good hedge.

Gold is also worth discussing; even though it’s near an all-time high, there’s a good chance that the future financial system I mentioned earlier becomes based on gold, rather than any single currency.

And if that happens, we could easily see $10,000 gold or more, likely by the end of the decade.

More on that soon.

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Tony Fauci should be in a prison cell in Wuhan right now given how much responsibility he bears for destroying US government finances.

This guy was one of the chief architects of the hysteria that took over the US (and much of the world) back in 2020.

Yet he now admits, according to recent Congressional testimony, that his infamous six-foot social distancing edict “sort of just appeared” and was “not based on any data”.

But it was precisely those sorts of claims that prompted politicians to close schools and business across the country, and to pay people to stay home and NOT work.

The financial results of this insanity are clear; the US national debt increased by an unbelievable $6.5 trillion during 2020 and 2021. And while there is a lot of blame to go around– politicians had ample time to find their intellectual courage– Fauci is extremely culpable.

Now, the US fiscal situation was already in bad shape prior to 2020. I remember back in 2019, when the economy was booming and federal tax revenue was at a record high, the US national debt STILL increased by more than $1 trillion that year.

And I wrote to our readers wondering– if the United States government still manages to add $1 trillion to the national debt when everything is awesome, what’s going to happen when there’s a real emergency?

Well, Tony Fauci gave us the answer the following year.

But even now that Covid is over, government overspending is still extreme. And it’s not getting any better.

I’ve been writing about this a lot lately, but today I need to explain where this is headed, and why it’s so inflationary.

Consider that, according to the Congressional Budget Office’s own forecasts, the United States will add another TWENTY TRILLION DOLLARS to the national debt through 2033.

Now, 2033 is a REALLY important date, because it also happens to be the year that Social Security’s primary trust fund completely runs out of money.

Social Security is funded in large part by workers who contribute a portion of their paychecks into the program through the FICA/payroll tax.

Social Security uses that tax revenue to pay monthly benefits to retirees across the country. And any surplus left over is rolled into a special trust fund.

Over time, the accumulated surplus in the trust fund amounted to roughly $3 trillion dollars; and all that money was invested in interest-bearing government bonds.

Between the payroll tax contributions and the trust fund’s interest income, Social Security always ran a healthy surplus.

Until recently.

Starting in 2020, there were so many retirees receiving Social Security benefits that the program barely broke even for the year.

The following year, 2021, was even worse. Social Security ran a deficit for the first time ever and had to dip into its trust fund to make ends meet.

This trend kept up in 2022 and 2023 as well. In fact, the program loses so much money now that its trust fund is shrinking rapidly, and Social Security projects it will fully be depleted by 2033.

One of the many, many reasons this is so important is because Social Security will no longer be a BUYER of US government bonds. It will be a SELLER. And that’s a big deal.

For the past 90+ years, Social Security always invested its annual surplus into government bonds… which essentially gave politicians an extra pile of cash each year to spend.

But now this cash flow will reverse. Instead of Social Security sending its surplus to the Treasury, the Treasury Department now must repay the debt that it owes to Social Security.

This nearly $3 trillion repayment will happen gradually over the next ten years. And then, of course, in 2033, Social Security will be out of money and require a multi-trillion-dollar bailout.

Unfortunately, the Treasury Department doesn’t have the money to repay this $3 trillion debt, let alone another $5 to $10 trillion to bail out Social Security.

This means that, in addition to the $20 TRILLION in new debt that the CBO is projecting over the next ten years, the Treasury Department will have to borrow an ADDITIONAL $3 trillion to repay Social Security. And then even more to bail out the program

(So, this means that the government will need to find someone to buy $23++ trillion of government bonds over the next ten years… which is just an absurd amount of money.

And it will have to do this at a time when it has lost some of its biggest investors; again, Social Security can no longer afford to buy bonds. And many of America’s biggest foreign bondholders, including China and Japan, are also not buying any more bonds.

So, who is going to buy all this new debt?

The only realistic option is the Federal Reserve. And this is nothing new for the Fed.

During the pandemic, for example, the Fed magically created about $4 trillion in new money, then used that money to buy US government bonds.

Of course, their $4 trillion in new money also helped create the highest inflation in four decades.

So, if buying $4 trillion of government bonds led to 9% inflation, what’s going to happen when the Fed has to create $20+ trillion to buy government bonds?

And by the way, the CBO’s $20 trillion estimate on new government debt is probably a bit too optimistic. It assumes there will be no new war, no pandemic, no national emergency, and no idiotic legislation that causes even crazier spending.

If any of those were to happen over the next decade, the increase to the national debt would be even higher… meaning the Fed would have to create even MORE money.

$20+ trillion is a ton of debt. And with no other realistic option other than the Federal Reserve to buy that debt, it’s easy to make a very strong argument for substantial inflation a few years down the road.

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Do you hear alarm bells ringing? Neither do I. And that’s a huge problem.

Granted, global power fanatics at the World Economic Forum just kicked off their 5-day cocaine and sex party festival in Davos, so they’re too tied up at the moment to notice this looming disaster.

And the White House is obviously too preoccupied with wrecking the economy and keeping Hunter Biden out of jail.

It’s clear that just about everyone is ignoring what should be the biggest news of the day… an ominous milestone that may just signify the point of no return. I’ll explain–

Recent data published by the Congressional Budget Office show that, last year, “Discretionary Spending” in the Land of the Free totaled $1.7 trillion dollars.

Remember, “Discretionary Spending” is one of the three broad categories of federal spending; the other two are interest on the debt and mandatory spending.

Interest on the debt and mandatory spending (which includes programs like Social Security and Medicare) are like your monthly mortgage payment– they get sucked out of the Treasury’s Department’s bank account every month. Congress doesn’t even debate or discuss those categories.

All of the haggling and bickering and politicking in Congress is purely over discretionary spending. And it includes almost everything else we think of as ‘government’, i.e. military, national parks, homeland security, embassies around the world, etc.

So here’s what’s remarkable:

Again, discretionary spending totaled $1.7 trillion last year– which includes US military expenditures.

However, the other spending categories– mandatory spending (Social Security, Medicare, etc.) and interest on the debt– were so vast that the federal government still had an enormous deficit for the year.

How enormous? $1.7 trillion enormous.

Look at those numbers again: Discretionary spending for the year was $1.7 trillion. The fiscal deficit for the year was also $1.7 trillion.

Conclusion? The government needed to eliminate ALL discretionary spending last year– including the military– in order to balance the budget.

Think about that. US spending is now so high that nearly everything we think of as government– from the United States Marine Corps to Yosemite National Park– needs to be completely eliminated in order to make ends meet.

Alarm bells should be ringing everywhere. But they’re not. Hardly anyone in power has even noticed.

Now, the US government has obviously been running huge deficits for decades. But it was rarely this bad.

In Fiscal Year 2018, for example, discretionary spending was $1.3 trillion. But the budget deficit was much less– about $700 billion. Sure, that was bad. But not like 2023.

Going back even further, to 2007, discretionary spending was about $1 trillion. But the budget deficit was $162 billion that year– i.e. bad, but manageable.

This problem has clearly become MUCH worse over time. And the government’s own projections show the trend will continue.

White House and Congressional Budget Office estimates forecast that this current fiscal year (FY24) may be slightly better; they’re projecting $1.6 trillion in discretionary spending… but ‘only’ a $1.425 trillion deficit.

But within about six years, the federal budget deficit will exceed ALL discretionary spending… every year.

In other words, by 2031, the US could permanently cut all discretionary spending, including the military, and STILL have a budget deficit.

As I’ve discussed many times before, there are very few options in this scenario.

One option is to default on the debt. But this is extremely unlikely given that it would cause a catastrophic financial crisis around the world.

A second option is to dramatically slash (and eventually eliminate) key programs like Social Security, Medicare, etc. But few politicians have the willingness to do so.

A third option would be an enormous asset sale, i.e. selling off Yellowstone National Park to China and other foreign investors. I will give you a lot more detail about this soon and show you exactly what the US owns… and why even such a radical approach still wouldn’t solve the problem.

Most likely the US will resort to the same tactic that bankrupt governments have relied on for centuries: inflation.

Septimus Severus was Roman Emperor in the 190s AD and found himself in a similar position; Rome’s fiscal deficit was massive, and he didn’t have enough money to pay his troops. So over a four-year period, he debased the Roman denarius coin from 81.5% silver, down to 54% silver.

Debasing the coinage meant that he could produce more coins with less silver… and hence pay his soldiers with increasingly worthless money.

The United States will likely do the same thing but updated for modern times; the Federal Reserve will step in with a new ‘quantitative easing’ program that creates trillions upon trillions of dollars out of thin air.

This money will be used to finance US government deficits at artificially low (perhaps even negative) interest rates.

But just like the debasement of Roman currency, this approach will eventually create serious inflation in the US.

Remember– I’m talking about a few years from now, not today. Inflation has fortunately been falling over the past several months, and I certainly hope that trend continues.

But if you look at the government’s own forecasts, it’s clear that there are very few options other than inflation after about 4-5 years from now, if not sooner.

This isn’t some wild, pessimistic conspiracy theory. I’m talking about the actual results from the last fiscal year, and the government’s own forecasts which project a terminal fiscal crisis by 2031.

That means it’s absolutely critical to look at these problems rationally… because politicians certainly aren’t doing that.

But there are solutions. If the data show that inflation could be a major problem down the road, then you still have a few years to plan for it and reduce its impact on your life.

And one of the best ways to do that is to own high quality real assets, i.e. scarce, critical, valuable resources that cannot be conjured out of thin air by central bankers or politicians.

We’ll have a lot more on this soon.

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Relax, it’s satire… Although it is getting harder to tell.

Pentagon Informs White House it Nuked Russia Three Weeks Ago

In a casually delivered press release, the Pentagon confirmed today that it had, in fact, launched a nuclear strike against Russia three weeks ago, but had simply forgotten to loop in the White House on this minor development.

“It’s been a busy month,” shrugged Defense Secretary Lloyd Austin, as he sipped his morning coffee, surrounded by a room of shell-shocked reporters. “You know how it is. Emails pile up, nuclear codes get entered, and before you know it, you’ve initiated World War III without telling the boss.”

The revelation came to light only after an aide to President Biden, while browsing Twitter, stumbled upon a meme about the nuclear apocalypse and questioned its accuracy.

The White House says they are “reviewing the situation” and has added a new rule to their daily briefings: “Check if we’ve nuked anyone.”

But when asked by reporters, President Biden seemed to downplay the seriousness of the situation.

“I’ve nuked countries before. This isn’t America’s first nuclear war, after all. In fact my son, Beau, died in a nuclear strike after he founded the Space Force,” the President said, before wandering aimlessly off stage.

Pentagon officials are not being forthcoming with details on whether the strike was intentional or not.

But we do know that the Defense Department’s highly-trained nuclear launch team— which is responsible for securing the nuclear codes and executing launch instructions— was suddenly replaced last month after right-wing extremists were discovered in their ranks.

One long-time member of the nuclear launch team, for example, was found to have shared a social media post last Independence Day saying, “Happy Birthday, America.”

And another veteran member of the launch team was caught displaying an American flag on his front porch.

These are both “well-known extremist dog whistles” according to White House press secretary Karine Jean-Pierre, which resulted in the President suspending the entire nuclear launch team roughly one month ago.

He ordered that the old team be replaced by a new team comprised entirely of pansexual persons who identify as Muslim women of Palestinian descent.

It turns out that the military ranks were very thin on pansexual persons who identify as Muslim women of Palestinian descent. So the Pentagon had to hastily recruit and train a new, completely inexperienced team in order to comply with the President’s demand.

The nuclear strike on Russia took place roughly a week after the new launch team was in place. However the White House insists that the team’s inexperience has nothing to do with the strike.

“It’s racist, homophobic, and misogynistic to suggest diversity in our ranks had anything to do with a nuclear strike which may or may not have been an accident,” Press Secretary Karine Jean-Pierre said.

When pressed for more details on if it was intentional, Defense Secretary Austin commented, “Never let the enemy know your next move. Let our enemies unequivocally understand that the same thing, or something different, may or may not happen to you, either intentionally, or unintentionally. That is how to project strength.”

New York City Hires Illegal Immigrants to Teach: “Already in the Schools Anyway”

An ingenious solution to kill two birds with one stone, or a recipe for disaster?

New York City has decided to bring on hundreds of illegal immigrants to fill vacant teaching positions.

As Chancellor David C. Banks explained, “These undocumented migrants are already in the schools anyway, being housed in the gymnasiums and cafeterias due to lack of space elsewhere. We figured, hey we have a teacher shortage right now. So we’ve hired 230 immigrants across the city.”

These immigrant teachers will also be allowed to sleep in their classrooms.

“The benefit there,” Banks said, “is unprecedented access to teachers. Parents can simply knock on the door at any time, which especially helps the disadvantaged who may not be able to afford Internet and email.”

We asked one of these new teachers how he felt about the program, to which he replied, “Que? No hablo ingles.”

But Chancellor Banks was ready for any skepticism on language barriers.

“It will be the duty of students to understand the native language of their teachers. Anything else would just be extremely xenophobic.”

In addition, the city plans to replace school bells with live Mariachi bands, in order to employ even more disadvantaged migrants. They too will be allowed to live in the schools.

In fact, plans include an entire school/ migrant camp hybrid moving forward.

“These migrants, they have so much to teach our kids,” Banks said. “I can’t think of a much more culturally enriching experience than to walk through and experience a migrant camp on the way to school, while practicing sports, and on the playgrounds. We couldn’t design that kind of immersive curriculum if we tried.”

Indeed, several unregistered taco and empanada food stands have sprung up in the school parking lot over the past week. But teachers and students don’t mind.

“The quality of the food is way better than what they serve in the cafeteria,” one teacher told us. “And it’s a fraction of the price.”

Meanwhile the girls’ volleyball team finds the crowds at their practices quite encouraging.

“I’m actually putting in extra effort, because I know the migrants in the stands are ready to whistle and cheer with each play. They’re super sweet, one even said, ‘¡Mamacita, estás que ardes!’ which I think means, ‘your mother would be proud.’”

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Earlier this week, leaders from both major parties in the Land of the Free announced a grand bargain that, in theory, should avoid a government shutdown later this month.

According to their agreement, Congress will supposedly cap its ‘discretionary’ spending at $1.6 trillion for Fiscal Year 2024. That’s down from about $1.7 trillion in FY23.

So, yes, technically this $100 billion reduction represents about a 6% decrease over last year. And if we want to be even more cheerful about it, we could call it a 9% decrease on an inflation-adjusted basis.

If we’re being intellectually honest, that’s a step in the right direction for the US. A tiny, tiny, tiny step in the right direction.

How tiny, you ask?

Well, pretty much non-existent; the agreement to cut spending is an almost entirely symbolic gesture that won’t do much good.

Before we go further, it’s important to understand that government spending is generally categorized into three distinct buckets.

The first bucket is interest on the debt. And, at least for now, this is non-negotiable. It has to be paid.

And I don’t mean it ‘has to be paid’ in the moral sense that “America always pays its debts.”

I mean, legally, interest on the debt is automatically paid. Just like your monthly mortgage, interest payments on the US national debt get automatically sucked out of the Treasury Department’s bank account.

The second bucket is what’s known as “Mandatory Spending”, which includes programs like Social Security and Medicare. Just like the interest bucket, Mandatory Spending gets sucked out of the Treasury Department’s bank account every month.

Those two buckets– Interest payments and Mandatory Spending– constitute the vast majority of US federal spending.

The third bucket is known as Discretionary Spending… because it’s at Congress’s discretion.

Discretionary spending what results from all their debates and arguments over annual appropriations, for everything from the military to the national parks. It also includes supplemental spending for pandemic bailouts, Ukraine, Hunter Biden artwork, etc.

So, the announcement this week was about $100 billion reduction to Discretionary Spending

But consider that Mandatory Spending (which Congress doesn’t touch) on Social Security alone surged $281 billion last year… and will likely increase by a similar magnitude this year.

So that single increase to Mandatory Spending will more than wipe out the entire $100 billion Discretionary Spending reduction.

Easy come, easy go.

Then there’s interest on the debt, which increased by $177 billion last fiscal year. It will probably increase by at least that much this year… which, again, more than wipes out the entire $100 billion in Discretionary Spending reduction.

If you drill down into the numbers, you’ll see pretty clearly that there are very few credible paths forward for the United States.

One path is to drastically… and I mean almost entirely… slash Discretionary Spending.

Look at it this way– last year’s Discretionary Spending was $1.7 trillion. The government is claiming that their annual budget deficit last year was also $1.7 trillion.

This means that, in order to balance the budget, they would have to almost completely eliminate ALL discretionary spending. No more military. No more Homeland Security. No more government.

In other words, one of the only ways to balance the budget would be a Zombie Apocalypse in Washington DC.

The second path forward is to make major cuts to Mandatory Spending… which would involve politically unpopular overhauls to Social Security and Medicare.

Few politicians have the courage to do so. And given that they can’t even agree on basic priorities for Discretionary Spending, it seems unlikely that they’ll come together for more difficult cuts to Mandatory Spending.

This leaves the third path forward: to prioritize economic growth and productivity… by slashing regulations and actually make it easy once again for people to do business.

And this approach would really work. If real (i.e. inflation-adjusted) economic growth were 3% or even 3.5%, instead of 2%, then America’s fiscal woes would be over within a decade.  And this is totally achievable.

With just 3% real growth, tax revenues would soar, the budget would be balanced, and the national debt would be trivial in comparison to the size of the US economy.

Seems like the obvious approach, right? Except that they’re doing the opposite… foisting even more regulatory burdens onto small business.

It’s no surprise that tax revenue last fiscal year was down 9% from the year before; that’s a testament to not only a weakened economy, but the Byzantine regulatory state that they’ve created over the past few years.

The most recent example is the Corporate Transparency Act (CTA), the completely idiotic and destructive piece of legislation that I discussed last week.

The CTA exists because the government thinks that its tax revenue should be higher. And they’re right– federal tax revenue SHOULD be higher.

But the government never points the finger at themselves. They never conclude that dwindling tax revenues are the result of their criminal mismanagement of the economy, including all the excessive regulations which debilitate business.

No, to them, the only possible reason why tax revenues are down is because of criminal tax evasion. So, their solution is to create even more regulation which forces business owners to file information reports to the government.

The even more pathetic part is that US businesses already must provide this information to the IRS.

But Congress doesn’t care. Instead, they demand that taxpayers provide the exact same information– but in a different format– to a separate agency within the Treasury Department.

Saddling small businesses with more paperwork is hardly the sort of thing that is going to make the US economy more productive.

So, they’re not going to eliminate Discretionary Spending. They’re most likely not going to find the courage or wisdom to cut Mandatory Spending.

And it sure as hell doesn’t look like they’re going to prioritize growth and productivity.

That leads to the fourth and final option: inflation… which, from a historical perspective, is what almost ALWAYS happens in these scenarios.

We’ll talk a lot more about this soon.

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