ECONOMICS > POLITICS
No election can pay off America's $175T in debt.
Only the printing press can.
Because as Elon, Dalio, and others realize...the Western world is headed for a sovereign debt crisis far worse than 2008. Just like they’ve been lying about Biden’s senility, they’ve also been lying about the economy. And so they're going to print a lot of currency. But take a look at the data and judge for yourself.
1) MORE EMERGENCY LOANS THAN 2008
First, did you know the Fed[1] made more emergency loans in 2023 than during the financial crisis of 2008? The banking system is on life support thanks to the US government first selling billions in bonds to financial institutions and then devaluing them with surprise rate hikes.
Just look at this graph from the Fed. The blue bump below on the left is the lending from the 2008 crisis — you know, that little old thing. The purple is COVID. And the giant orange/aquamarine monster on the right is the 2023 banking crisis. See how much higher it is than even 2008?
2) MORE BORROWING THAN COVID
Second, did you know the US is borrowing more[2] under the "Biden boom" than it did during COVID? Set aside whether a coronavirus should have been treated as a financial crisis. At least the COVID borrowing was at ~0% rates. But today the US government is borrowing historical sums of money in peacetime…and at 5% rates! This is the act of a desperate man maxing out his credit cards to pay his bills.
3) MORE INTEREST THAN DEFENSE
Third, did you know that all this borrowing has made interest payments on the national debt the single largest government expense? More than defense, or social security, or anything else[3a, 3b]. The number one thing all tax dollars (and printed dollars) now go towards as of 2024 are payments to bondholders. And even still, anyone who bought US Treasuries (or other bonds) got annihilated over the past few years.
For all the warfare and all the welfare, it was buy now pay later. And as you can see from the graph, the time to pay has come.
4) MORE DEVALUATION OF THE DOLLAR
Fourth, did you know that the dollar has lost at least 25% of its value in just four years[4a]? This one you probably knew from just your lived experience of inflation. But Larry Summers estimates[4b] that purchasing power has been eroded even more radically than this, with annual numbers hitting 18% if you include the enormous spike in loan payments due to rate hikes. Compounded over four years, that’d be considerably more than 25% of the dollar's value.
But wait, there's more. Six more graphs, and references. 
Elon Musk@elonmusk
Jul 22 24
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Where are we with dollar value destruction, you might ask?
5) MORE TREASURY DUMPING BY CHINA
Next, did you know that China (the single largest foreign buyer of US Treasuries) has been dumping[5] US paper at an accelerating clip?
This is a bit technical, but China is an “outside investor” in the US kind of like a new venture capitalist investing in your tech company is an outside investor. Even by buying just 5% of your equity (or in this case, debt), they set the price for everyone else. And show that there’s robust outside demand, by people who don't have to buy.
But now that outside demand is crashing:
6) MORE GOLD BUYING BY BRICS
But isn’t the dollar a store of value? What are other countries saving in if not US Treasuries? Well, China is a bellwether for much of the non-US world. And those countries have begun stacking historical quantities of gold[6], even as Western countries have been selling gold. Take a look:
7) MORE DEDOLLARIZATION THAN EVER
OK, what about the dollar as medium of exchange? Well, China — which is the #1 trade partner of most countries in the world now[7a], in case you didn’t know — has just flipped[7b] to majority CNY for cross-border FX deals.
8) LESS SANCTION EFFICACY THAN EVER
OK, but can’t the dollar still be used as a sanctions weapon? Don’t countries need access to the US financial system? Actually, no. All the sanctions on Russia actually ended up hurting Europe more than Russia. Europe needed Russia’s oil and gas, but Russia had other customers. So according to the World Bank[8] (not a Russian source!), Russia just flipped Japan to become the #4 global economy in GDP-by-PPP.
Two more graphs below, and then all the references.
9) PEACETIME DEBT APPROACHING WW2
All right, but what about the US military? Can’t it ultimately go to war to protect the dollar? Well, that’s a much longer conversation, but see the graph[9] below. Today the US is ostensibly in “peacetime." And yet it has comparable debt to WW2:
Again, a whole separate thread, but the US has neither the money nor the manufacturing base for a sustained military campaign against a peer rival like China. You can’t fight your factory — especially when you’re out of money.
10) TRUE DEBT MORE THAN ANY EMPIRE IN HISTORY
Finally, maybe the single most important number in the whole thread is the $175.3T figure. That’s actually the true debt of the USA, when you take all the entitlements into account, like Social Security and Medicare. And that number is itself rapidly increasing.
Don’t take it from me, take it from the Feb 2024 Financial Report[10] of the United States Government:
That $175.3T lines up with the ~$200T number that Druckenmiller[5] has been using for the all-in liabilities of the US government when you take everything into account. And of course, at this point we are in monopoly money territory, because:
a) The entire fedguv only collected ~$2T last year
b) That number is itself juiced by deficit spending
c) The dollar is down ~25% in real terms since 2020
d) And the "177T" in asset value plummets if liquidated
e) ...or if there is a financial crisis, or both
So, that 175T debt is unpayable. The US government doesn't have nearly enough to pay for what it owes. It's made promises to everyone, from allies to retirees, that it simply can't keep. To hang on to power amidst that web of broken obligations, it is going to get nasty on a level beyond which most can really comprehend.
THE DOLLAR IS BECOMING LESS ESSENTIAL
In short: I really haven’t even gotten started. There are many more graphs I could show, many more videos from investors around the world from bonds to real estate to tech who're seeing what's happening.
But if you’re intellectually honest, the dollar’s position is rapidly eroding. It simply isn’t the indispensable asset it was. To summarize:
a) China doesn’t need the dollar to trade, they’re using CNY instead of USD.
b) BRICS doesn’t need the dollar to save, they’re buying gold instead of US bonds.
c) Russia doesn’t need the dollar to live, they’re the #4 economy after being shut out of the US economy.
d) Yet the US needs as much of the world as possible to accept the dollar, as it’s borrowing at levels beyond COVID, beyond WW2, beyond any empire in history.
So: what comes next? I have some ideas, but first we need to align on what’s happening.
REFERENCES
[1]: Fed's own blog admits 2023 saw more emergency lending than 2008:
fredblog.stlouisfed.org/2023/04/the-le
[2]: Borrowing after COVID approaches borrowing during COVID, but at much higher rates (5% vs 0%).
fxstreet.com/analysis/fisca
[3a]: Interest payments soar to exceed defense:
x.com/YahooFinance/s
[3b]: Interest payments exceed everything!
pgpf.org/blog/2024/07/a
[4a]: The dollar has lost at least 25% of its value in four years.
truflation.com/dashboard?feed
[4b]: And it might be much more than 25%, if the 18% loss of value in one year is right.
x.com/LHSummers/stat
[5]: China is dumping US Treasuries.
michelsanti.fr/en/china/china
[6]: BRICS countries are buying gold.
x.com/PopescuCo/stat
[7a]: China is the world's #1 trade partner.
economist.com/briefing/2021/
[7b]: China is dedollarizing on its own trade corridors.
x.com/StubbornFacts/
[8]: Russia flips Japan in 2023 to become #4 GDP by PPP. See here (finshots.in/archive/russia) and here for the raw data (data.worldbank.org/indicator/NY.G)
[9]: 150 Years of US Debt.
See here (visualcapitalist.com/wp-content/upl) and also here: visualcapitalist.com/timeline-150-y
[10]: Feb 2024 Treasury report admitting to $175.3T of debt, buried on page 193 rather than put on the cover:
fiscal.treasury.gov/files/reports-
[11]: Oh, and here's one more debt infographic by the Petersen Foundation: pgpf.org/blog/2024/07/a
Here's a long form version.
balajis.com/p/americas-175
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