The USD is going to turn into monopoly money faster than people realize
People are starting to say 'deficits don't matter' just as they matter more than ever
Owning a non fiat store of value is more important than ever
In 2022 the govt officially turns into a ponzi
Debt and deficits are rising faster than ever
Deficits just surpassed $1tn. They're not slowing down
The $20tn trillion Treasury market was the $10tn trillion Treasury market a decade ago
Real deficits are even worse. Boomers are retiring and entitlement spending is going through the roof
When you count all government liabilities, the real debt balance isn't $20tn
It's 10 TIMES higher: $200tn
By 2022 'real interest expense', will surpass all tax receipts
This is historically when fiat currencies collapse
We'll need more debt just to fund EXISTING DEBT. This is like rolling credit cards. The US will be running a ponzi
Who would loan us money?
You can't finance new debt with existing debt forever, bc at some point new buyers run out
Foreigners, historically the largest buyers, realize this
And theyve stopped buying our treasuries as a result
The trade war. Foreign sanctions.THIS is the cause
This means that private institutions are left to buy the debt
But this crowds out other investment. Specifically the equity markets, causing massive reflexivity
Stock prices will decline, driving up deficits even further because of the wealth effect
This is also coinciding with bipartisan support for the MMT nonsense and increased fiscal spending
2008 was a socialist policy for bankers
The rest of the country wants a similar socialist policy
And with the likes of / rhetoric of Bernie & AOC, they'll probably get it...
But by 2050, ALL of our tax receipts will already be going to Boomer's entitlements
The US government will be just one big machine made to finance the boomer's retirement
We don't have any room to add massive fiscal policy
Meanwhile, the impending social plans aren't going to be cheap
AOC's new deal would cost (just) $90tn....That's over 4x our GDP
...Because 'deficits don't matter' right?
We're not going to end up spending that...but you get the point
The only way to finance NEW spending will be the fed balance sheet
Despite purportedly selling off the balance sheet, it's going to go the other direction
The money printing machine is going to get revved up again
No institutions are going to finance the debt given the credit risk
The Fed will be forced to, and holders of the currency will take the hit
According to @RayDalio
“You easily could have a 30 percent depreciation in the dollar through that period of time.”
Remember, this is all LATE CYCLE too
The fed has already turned most of these dials
We've been on QE novocaine for 10 years already
Next crisis, when we really need the monetary ammunition the most, we'll be out of bullets
Can the Fed soften the blow of the next collapse?
Modern Monopoly Money Theory could work early cycle in a "closed system"
But if there’s a exit / neutral arbiter of value, the market wont finance a govt that can only bail itself out w. more debt
The scarce asset will offer better real returns
Think of a currency like equity in a nation
The debt holders are more senior. Equity holders will be diluted to pay them off
When people realize this, they will rush into scarce assets and "sell off the equity"
Assets like BTC and gold will skyrocket in value
But this won't be gradual. I think it happens in a massive step function value increase as confidence in fiat currencies vanishes
Meaning, if you're not in these assets *before* the move, you're riding the sinking ship lower
This is all happening right before our eyes:
Populism. MMT nonsense. Demographic shifts
The people running the presses aren't buying fiat currencies. They're buying a 'worthless rock'
Japan is domestically funded creditor nation whose military is largely provided for by the US.
US is historically a foreign-funded twin deficit nation who must pay its own military.
At very least suggests USD should be much more sensitive to this than JPY has proven to be.