Alarm bells should be ringing with the news that the government sold $694 billion in Treasury securities spread over 9 auctions in only three days. Yeah, our national debt now stands at $38.2 trillion. The most alarming thing about this news is that T-bill yields are rising. The 10-year Treasury yield is now at 4.15%. At that rate, the interest on our debt will be more than $1.5 trillion per year. Since Americans only pay about $2.4 trillion in Federal taxes each year, we are edging closer to the point where our debt will begin to grow like a snowball rolling down a mountain.
The only way to keep the government solvent at that point would be to inflate the currency in order to pay it with lower valued money. At that point, inflation will be higher than interest rates, and it will no longer be financially possible to invest in government bonds. This will in turn cause higher rates, which will also create a need for higher inflation. In other words, hyperinflation is the only way out, but that will cause a complete collapse of the US dollar.
Anything you own that isn’t a physical asset will evaporate overnight: currency, stocks, bonds, bank accounts. As you can imagine, the government can’t let that happen, so what they will do to deal with it is the real question…
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