The U.S. government can’t keep a lid on its debt.
Ever since Herbert Hoover’s presidency in 1929, the debt has increased under every president.
And these days, the U.S. debt roughly doubles every eight years.
This, of course, isn’t shocking.
That’s because the Federal Reserve has made it a point to borrow or print money to run our economy.
The last 15 years are a case in point.
Since 2008, the U.S. has inflated the monetary supply by $13.73 trillion. That’s a massive increase of 180%.
This is called quantitative easing (QE). It’s a form of monetary policy that drives down interest rates and contributes to increased borrowing.
QE pushes the printing presses to work overtime. It’s when the Fed creates cash to buy bonds from banks.
That’s bad for the dollar. It’s no coincidence that the greenback has lost about 93% of its purchasing power since Hoover.
So today, I want to explore why our nation’s skyrocketing debt will continue to erode the value of the dollar. I’ll also reveal how you can protect yourself against this unstoppable trend…
A Vicious Cycle of Debt and Loans
Before the Financial Crisis of 2008, the U.S. national debt stood at around $9 trillion. By the end of the same year, it had surpassed $10 trillion. This is an increase of over $1 trillion in just one year.
Coincidentally, this was the same year the Fed announced its first QE program.
It’s also when the gap between the wealthy and the average American began to widen at a pace we’d never seen before.
Fast forward to 2020-2021, and the pandemic pushed the debt figure to $23.53 trillion.
And since the pandemic, U.S. debt exploded by another nearly 50% to about $31.5 trillion. That happens to be a bit over the most recent debt cap of $31.4 trillion.
But a more important metric to consider is the ratio of that debt to gross domestic product (GDP). It not only shows how much debt a country has, but also how much it has to borrow relative to the size of its economy.
Last year, the U.S. had a debt-to-GDP ratio of 129%. And it’s expected to reach 133% by the end of 2023.
So for every $1 the U.S. economy produces, more than $1.30 will have to be borrowed.
Only Japan, Greece, and Italy have a higher government debt-to-GDP ratio.
Now, here’s the problem with having a lot of debt…
The more debt there is, and the higher the interest rates on it, the more debt the U.S. will have to issue just to keep up.
This creates a vicious cycle. Anyone who’s taken out massive loans is already familiar with this gruesome process…
U.S. Debt Is Only Bound to Go Up
Now that the U.S. raised the debt ceiling and put an end to its political posturing show, the Department of the Treasury has been scrambling to get back to business as usual.
In other words, it needs to raise cash. And fast.
So on June 5, it auctioned off $15 billion worth of one-day cash management bills.
These bills mature in a relatively short time frame, from a few days to a year. They’re used to help manage the Treasury’s short-term financing needs.
In the past 25 years, the Treasury has held just six one-day cash management bill auctions. It’s a pretty extraordinary measure.
What’s more, the Treasury also issued an additional $123 billion in longer-term bills on June 8.
The reason is simple: The government has to pay off some big bills soon. And the Treasury makes most of its interest payments around the 15th day of each month.
Now that the debt ceiling bill has been signed into law, you can bet that the Treasury will announce more borrowing initiatives.
Long ago, Benjamin Franklin said: “Two things are certain – death and taxes.”
Here’s a third one: The U.S. debt will always continue to go up.
And as the debt increases, it will chip away at the U.S. dollar.
What This Means for Your Money
You don’t need to be an economist to know that issuing more debt only makes our economy and currency more vulnerable.
You see, the dollar is not as powerful as it used to be.
And as more countries around the world begin to turn away from the dollar, the Fed is set to enact a transformation to our monetary system to maintain its power.
The Fed and the financial elites are about to do the same thing they did in 1913… 1933… and 1971.
They’re going to launch an inside attack on the dollar… and unleash a new era of pain and suffering for most Americans.
The good news is, those who position themselves early for what’s coming can safeguard their wealth – and even profit from the Fed’s fourth attack on the dollar.
Tonight at 8 p.m. ET, I’m hosting a special briefing called Countdown to Chaos.
In it, I’ll reveal exactly what’s about to happen… and one “non-programmable” asset you can use to see 5,000% gains or more.
Reserve your spot with one click here.
Regards,
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Nomi Prins
Editor, Inside Wall Street with Nomi Prins
P.S. I’ve circled July 31 on my calendar…
That’s when the Fed will unleash its final mandate on the American people and grab unprecedented power.
The good news is, time after time, when chaos strikes the markets, there’s one asset that shoots higher…
So tonight at 8 p.m. ET, I’ll reveal exactly what’s about to happen… and how you can use this asset to see your money go up by as much as 50x. Sign up for my special briefing with one click right here.