$1 Million a Minute Since JFK

What does $40 trillion actually look like?

You cannot picture it. I certainly can’t. No one can. It’s just too large to wrap your head around.

So, consider this:

John F. Kennedy took the oath of office at 12:51 PM on January 20, 1961.

Imagine that at precisely that moment, you spent $1 million.

Then another $1 million a minute later.

And another every minute after that. And so on.

No sleep. No weekends. No coffee breaks. Just $1 million disappearing every 60 seconds for the next 65 years.

You’d still have more than another ten years to go before you’d spent $40 trillion.

Ask not what your country can do for you—ask what you can do to protect yourself from your country.

To wit, this headline from Fortune:

With the national debt nearing $40 trillion, Bank of America has a warning for bond investors.

Per the connected story:

The U.S. national debt is hurtling toward $40 trillion, and Bank of America Research strategist Michael Hartnett’s “Anything but Bonds” framework is becoming ever more applicable. Boiled down, Hartnett warns the U.S. is accumulating too much debt, which causes the government to issue too many bonds.

His “Anything but Bonds” call reflects his view that investors should be wary of long-duration government debt while the U.S. continues to run large deficits and the market demands higher yields to finance them.

The concern is … that the government has to continually refinance and issue more debt, creating a larger supply of bonds that investors need to absorb. If investors become less willing to buy that debt at existing yields, the government has to offer higher interest rates to attract them.

New bonds become more attractive because they offer higher income, but existing bonds lose value when market yields rise.

This is a story of crisis-to-come that El Jefe has been crooning for about two years now.

The size of the debt is hugely significant for sure. I mean, $40 trillion?

But like I said, it’s not really the size of the debt, because the payor behind the debt is Uncle Sam. And Uncle Sam owns a magical machine that summons vast amounts of cash out of the ether. So, the Treasury Department will always have the money it needs to pay the debt.

The problem is that Treasury cannot control the buyers.

Buyers who are reticent about Sammy’s addiction to debt are already demanding higher interest rates to loan money to America. The 10-year Treasury note just hit its highest yield since 2007. The 30-year bond just hit its highest yield since 2001.

Even 28-day T-bills, the super-short-term paper the government is using to keep the lights on because it’s the cheapest money available, are now above 3.6%. As recently as 2021, that was 0.05%… meaning America is paying about 72x more in interest payments to postpone insolvency by four weeks at a time.

I know this is just “more sour news from El Jefe.”

I get it.

But I grew up in hurricane country. No one yelled at the weatherman for popping up every hour when a category 5 storm was barreling through the Gulf of Mexico with its sights on Louisiana.

It’s news you could use to prepare for what’s racing toward your life.

Same here.

I don’t share news of the storm to come to tell you how poorly politicians of all stripes have run America over the last 40 years.

I tell you because the storm hasn’t veered toward Mississippi… It’s closer than ever. And there’s no space lasers or whatever deus ex machina you prefer that is going to magically eradicate it.

The only path forward at this point is a financial reset of some kind. That could take shape in a number of ways I don’t have the space to share with you here…

What I will tell you is that this situation is why you seriously have to think about other ways of creating income in your life going forward. US debt is a disaster waiting to happen. Bond funds and bond ETFs in particular, and especially long-dated bonds of 10 years and beyond, face a Come to Jesus moment.

As the world demands higher interest rates from Uncle Sam, the value of existing bonds goes down, meaning bond funds are going to be losing value.

Tomorrow, to give you a teaser of my Retirement Income Masterclass, I’ll be telling attendees to absolutely avoid bonds until it’s clear America has a clean path forward financially. Otherwise, a 60-40 portfolio (in which 40% are bonds) is going to suffer some serious pain.

I’ll also be sharing how there are much better ways to create income these days than trusting your wealth to a country that has accumulated so much debt that the only way out is a reset that will wipe out vast amounts of American family wealth.

Protect yourself while you can.