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But of course it couldn\u2019t continue forever. As the critics predicted, soaring debt required ever greater currency creation which eventually caused the cost of living to jump by 10% in 2022, leading regular people to demand that it stop. So the Fed now has to raise interest rates to counter inflation. You can see this happening on the far right of the above chart.<\/p>\n
Here\u2019s where the death spiral kicks in \n<\/strong>As the US borrows more money and its existing debts roll over at higher rates, the cost of that debt is soaring. This year the government\u2019s annual interest bill will break $1 trillion. Combine that with the soaring cost of Medicare and Social Security as millions of Baby Boomers retire, and Washington is looking at $2 trillion a year just in just interest and entitlements, which it will have to borrow to fund, which will send interest costs even higher, which will require more borrowing, and so on, until it all comes crashing down.<\/p>\n\n
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Here\u2019s another useful way of visualizing the problem. As debt rises, the interest rate required to keep debt service costs from eating all of a government\u2019s tax receipts falls. In the US case, those two lines are in danger of crossing in the next few years. No society has ever survived that kind of fiscal crisis.<\/p>\n
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To the extent that the Fed knows anything, it knows this, and really, really wants to force that blue line down into negative territory if possible. But it also knows that doing so will send prices spiraling out of control \u2013 which is another way of saying the dollar will crash (not necessarily against the euro and the yen, which have similar problems, but against oil, lumber, eggs, milk, cars, and all the other things voters buy regularly). The result? Political and financial chaos.<\/p>\n<\/div>\n<\/div>\n<\/div>\n
Read More @ rubino.substack.com<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"by John Rubino, John Rubino: Gold bugs and other long-suffering critics of fiat currency and endless credit expansion have for decades been predicting that soaring debt would eventually blow up the financial world. As the story went, governments with unlimited printing presses would spend and borrow too much, forcing their central banks to keep interest […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[148101],"_links":{"self":[{"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/posts\/336644"}],"collection":[{"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/comments?post=336644"}],"version-history":[{"count":0,"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/posts\/336644\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/media?parent=336644"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/categories?post=336644"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sgtreport.com\/wp-json\/wp\/v2\/tags?post=336644"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}