According to Hirschmann Capital,¹ 98% of nations or political states that hit 130% sovereign debt to GDP in the last 225 years had hyperinflation, default, or a major war within 15 years. Other options are obviously possible, but for it to occur later than the 2030s would be (by definition) a historical outlier... For it to never happen is even more remote.
Concerning Ray Dalio's changing world order thesis, our empire's decline is nearly complete.² The loss of reserve currency status has already begun with BRICS expansion and global dedollarization, a process hastened when Biden dropped a financial nuke on Russia with the seizure of its reserves. This completely discredited sovereign debt as an FX reserve.
After factoring in the gradual demise of the petrodollar system as well, a multi-currency, multi-polar world is all but inevitable. Foreign sovereigns must now diversify as a matter of national security, and many citizens must now diversify as a matter of self-preservation.
Guess who also penned an article titled "Dethrone King Dollar" about how the government needs to drop its commitment to maintaining the dollar's reserve-currency status?³ None other than Biden's appointee for top economist, Chair of the Council of Economic Advisers Jared Bernstein.
We are approaching a cliff of unsustainability where the universal answer is to plug the ever-widening insolvency hole with an ever-faster printer. The financial system has turned into a casino that only can function with evermore monetary and fiscal stimulus.
Bloomberg recently ran a million NDEX simulations that confirm this notion.⁴ As a result of assessing the 'fragility' of the US debt outlook, 88% of the simulation results showed the debt-to-GDP ratio is on an unsustainable path.
In this era of fiscal dominance, the Biden-Harris administration's Inflation Reduction Act means little when soon afterward they propose a budget that increases spending from 22.7% of GDP in FY 2023 to 24.6% of GDP in 2024 and to 24.8% of GDP in 2025. Budget deficits are also estimated to rise from $1.7 trillion (6.3% of GDP) in FY 2023 to $1.9 trillion (6.6% of GDP) in 2024.⁵
The Federal Reserve raised interest rates and implemented QT at one of the quickest paces in history to rein in the inflation that they brought about by permanently expanding the money supply during the pandemic. And yet, our elected leaders are doing everything in their power to undermine that with these recklessly loose fiscal policies.⁶
Clearly, raising taxes or cutting spending now is no longer sufficient. There must be some sort of default. The current and most probable course of action is structural inflation—at a much higher % than the Fed's 2% target—to debase the currency and blunt the impact of overwhelming debt with a rolling soft default.
How did we create such a severe problem? In America, incumbents get reelected north of 90% of the time. Did you know in the House of Representatives, the reelection of incumbents has never dipped below 85% of the time?⁷ Who doesn't like those odds? This is a major reason why nothing changes and they enrich themselves while you struggle. We get the same people in office cycle after cycle.
Regarding national domestic politics, it's also become clear that nearly all of politics and central banking has become a theater. The skillset to win an election is unfortunately different than the skillset to govern effectively. Plus, as soon as you're in office, the entire incentive structure flips.
So, the media is largely propaganda, politicians don't represent your interests, and your money is fake. Political discourse has turned into perpetual quibbling about where to aim the money printer. It's a system run largely by geriatric cantillonaires who have done nothing but get themselves closer to said printer for the last 40 years to accrue their wealth and power.
Fiscal responsibility and economic sustainability are foundational, as they enable governments to fund the social, infrastructure, and defense programs citizens prioritize. Unfortunately, our leaders are primarily concerned with expanding these initiatives to appease voters at any given cost while largely ignoring the long-term costs they accrue.
The divisive identity politics and bipartisan uniparty theatrics they promote are nothing but bread and circuses. They provide an illusion of choice, keeping you oblivious to the reality that you're a slave to a banking cartel that creates the money you work for out of thin air.
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” - Henry Ford
By the way, if you want to see all the ways the federal government lights those already-depreciating dollars they collect from you via taxes on fire, check out the Citizens Against Government Waste website.⁸
Assume politics will be incompetent, and build/embrace technology to fix that. Recognize that although politics rarely sets the trend for technology, technology often sets the trend for politics. As technology changes, politics adjusts around that new reality, not the reverse.
In fact, technology is already replacing aspects of politics in that it obsoletes many of the central planners in our so-called "capitalist" system ("capitalism" is a misnomer here given the manipulation of interest rates and currency debasement through inflationary monetary policies represent forms of government intervention that distort market mechanisms and undermine economic freedom). The WEF and those promoting the Great Reset understand this and are attempting to coopt these technologies to maintain control nonetheless. Do not listen to them. Own things. Expend energy. Do not live in a pod. Do not eat the bugs.
All in all, uniparty policy is perpetual monetary expansion and asset inflation at the direct expense of average people just trying to put food on the table. Virtue signal and opine about "systemic change' all you want, à la Occupy Wall Street. Feelings and opinions don't drive paradigm shifts, technology and capital do.
"Market forces, not political majorities, will compel societies to reconfigure themselves in ways that public opinion will neither comprehend nor welcome."
- The Sovereign Individual
REFERENCES
¹ https://www.lynalden.com/does-the-national-debt-matter/
² https://x.com/AndrewYang/status/1530926047344066561
³ https://www.nytimes.com/2014/08/28/opinion/dethrone-king-dollar.html
⁴ https://www.bloomberg.com/news/newsletters/2024-04-02/a-million-simulations-shows-us-debt-danger
⁵ https://www.crfb.org/blogs/overview-presidents-fy-2025-budget
⁶ https://x.com/jsblokland/status/1824704854394069311/photo/1
⁷ https://www.opensecrets.org/elections-overview/reelection-rates