No Light at the End of the Tunnel

It’s always darkest before the dawn.

Unless, of course, you’re stuck in the non-romantic version of Groundhog Day and it’s eternally 2 a.m. and all the hoodlums and thugs are prowling the back alleys for victims.

If you didn’t see this headline, well, prepare to sigh…

‘Truly depressing achievement’: US hits record $34 trillion national debt — more than the value of China, Japan, Germany, India and the UK’s economies combined. What does this mean for you?

Thirty-four trillion.

More than the combined value of five of the biggest economies in the world.

“Truly depressing”—seems a bit soft-peddling, really.

Destructive. Debilitating. Shockingly stupid.

Those seem to be better descriptors.

But that headline does cut to the most important question anyone can ask about this dark achievement Uncle Sam’s clowns have foisted upon us: What does this mean for you?

The answer seems pretty obvious.

It means nothing good. Not in the slightest. There’s no way to spin this as “look how great America is!”

Of course, it does prove America is indeed #1… just not in a category in which any country ever wants to lead. And certainly not by such an egregiously large lead.

You’ve heard of “failing upward,” I’ll bet.

American government is “succeeding downward.”

As with so much of American political, social, and fiscal life these days, this is not going to end well for anyone except the politicians making bank off their elected positions, and the financiers funding America’s fiscal debauchery.

What has all that debt bought us?

We’re the largest economy in the world! Yay!

But we’re the largest economy only because we built this country on debt. Yay…

Had America accumulated debt prudently, then all is dandy—like a wise family smartly using a manageable amount of debt for a comfortable house and a decent living.

But America is more like a Mickey D’s burger flipper earning minimum wage while paying for a $5 million Hollywood Hills mansion and driving to work in a $350,000 Mercedes Maybach. They think they’re king of the hill—look what I’ve accomplished!

The truth, of course, is much harsher.

Pain awaits.

Bankruptcy.

Financial devastation.

A deeply reduced standard of living is coming to visit soon enough.

That’s where we are now.

And it begins to get to the answer to that question: What does this mean for you?

In soundbite terms, it means America is racing toward a financial reset. This isn’t a do-over or a mulligan on the golf course. Nothing nearly so neat and painless as that.

What’s coming is a reckoning. The biblical kind—hordes of locusts devouring your crops, plagues and pestilence partying day and night.

Debt is unkind when provoked.

You pay it off, all is copasetic.

You let it accumulate and grow ever larger, and suddenly it’s a festering abscess and the only thing the docs can do is take off both legs at the hip.

America cannot—will not—ever pay down the debt to a manageable level. There’s just no means of doing so. As it is now, the government doesn’t bring in enough cash every year to pay the costs of running the country. It has to borrow more money every single year. And that means more and more borrowing just to cover the interest payments on the debt Uncle Sam took out to cover last year’s debt payments.

I keep thinking to myself: How does this ultimately end?

I mean, government can’t just run up an ever-larger mountain of debt. Because America must borrow money from lenders and investors all over the world to support its economy, reducto ad absurdum tells us that at some point the U.S. debt would be so large that it would require every dollar the world earns just to buy America’s debt.

Instead, there must be a pressure-relief valve somewhere in the piping.

In 1933, the pressure relief valve was FDR confiscating gold, repricing the metal by 69% and immediately raising the value of America’s suddenly expanded gold reserves.

In the early-70s, it was Nixon taking America off the gold standard. The benefit: reducing inflation (temporarily) and allowing the U.S. government to print money. While on the gold standard, the U.S. could only print as much value of the gold it owned. Absent that restraint, government could spend freely, ramp up production of money, and grow without any real monetary oversight.

What will the “fix” look like this time around?

Hard to say.

My bet is that it will incorporate a new U.S. Central Bank Digital Currency—a bitcoin-like digital dollar that only exists on the blockchain. That digital-currency world will likely arrive by 2027—just in time for the fiscal crisis I’ve been predicting—and though some mechanism, the Fed, the Treasury, and the government will figure out a way to haircut the value of America’s debt, spun in a way that makes the average American think they’re benefiting from this, but which is really screwing over America’s foreign debtholders.

And just like the resets in 1933 and 1971, which actually screwed over Americans just as much as it did foreigners, so too will Reset 2027 destroy family wallets and family savings on Main Street, USA.

Like I said: Always darkest before the dawn…

Unless there’s no dawn coming.

Our best play at this point is what I always counsel: gold, silver, bitcoin, and Swiss francs.

So, welcome to the darkness.

In the darkness to come, those are the only lights we really have.