The world’s largest bank, JPMorgan, has stated that attempts of Ukraine reconstructing their infrastructure have a 67% chance of failure. Of course, the MSM doesn’t want to hear that. They make plainly biased statements like this one:
[JPMorgan] was essentially wagering against the same Ukrainian agency that has consistently defied institutional expectations.
That statement is not only biased, but reliant on other nations continuing to borrow money that they don’t have, so they can continue to use it to bolster a failing Ukraine economy. Since the war began, the world has donated an amount equal to two years’ of Ukraine’s pre-war GDP. Since the war is only three years old, that is quite a large sum of money. I imagine if someone making $50k a year needed to borrow $100k over a three year period so they could pay their bills.
In the meantime, the nation is having its industrial and farming base systematically blown to smithereens. The only way that is going to be rebuilt is with LARGE amounts of free money. I agree with JPMorgan- any investment in Ukraine is likely to be lost.
The US isn’t far behind. Canada has been the largest of the central banks selling off US treasuries since the first of the year. In fact, just the month of January saw foreigners selling a net $13.3 billion of U.S. notes and bonds. That comes after $49.69 billion was sold in December, following sales of $34.41 billion in the month of U.S. elections, November. Before that, Central Banks had been buying for 15 straight months.
While dumping treasuries, central banks across the world have been selling before using the funds to buy gold. De-dollarization isn’t a new idea, but has taken a life of its own after the U.S. froze Russian assets. Central banks added 1,045 tons to global gold reserves in 2024, exceeding 1,000 tons of gold purchased for the third straight year. That’s why gold prices are surging. It seems that Central Banks are thinking that the US dollar isn’t the safe haven that it used to be.
With other nations, particularly China, in the middle of dumping US treasuries, the Fed is bolstering the dollar and attempting to keep the interest on the debt low. They are doing this by buying US treasuries, in other words, they are monetizing the debt- printing more money in order to pay the bills. The Fed purchased $43.6 billion in 30-year bonds during the second week of May alone.
Of the $37 in US government debt, the Fed holds about an eighth of it- 12%. The US government owns about 20% of that debt, mostly because they have to repay what they “borrowed” from the Social Security Trust fund. In other words, there is no trust fund, because they already spent it all.
The Fed is playing a game here- they are buying Treasuries when inflation is low, then selling them when inflation is high. This allows the country to pay back the debt using inflated dollars. Of course, we continue to borrow and spend at a rate that is higher than the Fed is monetizing it. That means it is in the Fed’s (and our government’s) best interests to have high inflation. Why? It allows them to spend more money, which is how they simultaneously buy votes and make themselves rich through graft, corruption, and kickbacks. As our debt gets larger, expect more of this.
That’s why the DOGE team found so much wasteful spending, yet weren’t able to get either party to cut any of it. For example, the US paid $10 million a year to fund circumcisions in Mozambique. Why are we paying for that? The powers that be claim that it’s to prevent the spread of HIV. That’s crap. For one, it isn’t in the US interest to pay for medical care for other countries, and for another, you can assume that most of that money is being wasted or redirected. We are borrowing ourselves into the poorhouse to pay for medical care for an African nation with money that we don’t have.
Yet when Elon Musk and DOGE found dozens of examples of wasteful spending, the members of both parties couldn’t find it in themselves to cut that spending. This is why Musk finally quit. His quote on Social Media was “I tried my best.” All it did was make him hated by half the country, while not doing a thing. The only thing you can conclude from this, is that the Republicans are just as crooked as the Democrats. They are all stealing us blind.
So what does all of this mean? It means that the nation’s economy, followed by its government, is going to collapse. I’ve been saying that on this blog for nearly the entire 18 years of its existence and was saying it to others for years before that. In fact, my econ professor in college, an avowed socialist, gave me low grades on a few papers for making those same claims in college papers.
Anyone who thinks that this fiscal ship can be righted is simply deluding themselves. This nation’s economic ship is going down like the Titanic, and the only question remains is what will replace it. History shows us that the new government will result in far less freedom and will be far more Orwellian, a result of the people who have lost their bread and circuses demanding that daddy government step in and restore their freebies.
Food for thought.