US Federal Debt Tsunami Warning

What is Greenland worth again? Ha! And how did that old idea go: If you want to defeat the US, then keep the peace long enough for it to collapse internally? No war, no profit.

I guess 2 things the Musk admin (the real brain behind anything substantial) will do:

1. Inflate the USD to make the debts more

serviceable (tariffs help here beside generating revenue).

2. Build up Bitcoin as reserve currency.

Gold is no option as the US has not enough and Russia/China and others have accumulated a lot over the past decades. With Bitcoin they can run a huge speculative bet and also provide the Americans an escape from inflation hell, which otherwise would lead to civil war. To reduce expenses the US will stop the global power projection which has failed anyway, but focus on their region and take all the low hanging fruits. Greenland, Canada, Panama. Next, probably Venezuela and other resource rich countries. Probably also S-Afrika as Musks personal project. If S-Afrika becomes part of the US, Musk might be able to run for president 2028. And its rich on resources and a geopolitical important position.

If I were a member of the US House, I would propose the following procedure: (1) The US government immediately defaults on all debts owed to the largest 50 US financial institutions. "Those pieces of paper you hold are worthless now." That instantly puts Blackrock, Vanguard, and all of the "Federal" "Reserve" banks into permanent bankruptcy. Debts to smaller financial institutions would not be affected. (2) If that's not sufficient, the US government defaults on all debts to the largest 50 Western financial institutions. NATO member countries, Canada, Japan, and Australia. Good idea?

A little puzzled: 7.064-4.929= 2.135 new debt amirite? (not 4 trillion new borrowing). So if Musk admin can cut about 2 trillion from spending, it would balance rev vs spending.

"A debt tsunami is different because the substance in question is different: water is physical while money is a mental construct that has no physical reality at all." Brilliant.

Side note: I needed cash upfront when I got my first job (16 years old). I asked my father for a loan. He placed $30 in an empty drawer and said take whatever you need. A couple of weeks later I asked my dad for a new loan. He told me to go to the drawer and take whatever I needed. I went to the draw, it was empty. When I told him the draw was empty. He asked me "What happened to the money you put back?"

A formula and goal for peace and continued human progress is to achieve "0" Debt + continually expand and upgrade the reproduction of goods and services for present and future generations.

Dmitry,

Thank you for the great post. As you have often stated before, this debt and its management reminds me of Sisyphus, with the ultimate result not difficult to discern, only question is how long this can continue. Meanwhile for some of us, who are in the US, I would appreciate if you can give some sound advise on how to hedge against the coming catastrophe. You are knowledgeable in this area (and experienced as well with the 90s in the Soviet Union). This would be very useful and valuable information.

Rojac

Dmitry, 

Sorry, a badly construed sentence. "Every time YOU talk about this debt, it reminds me ...". I understand you could get out of the USA, but people have different situations. I am glad if you can suggest some possible solutions.

Rojac

Quick question: I was under the impression that "Rare Earth's" were ubiquitous. It's the separation process which is the problem. Highly toxic acid/chemical baths type operations. Environmentally unfriendly ....to say the least. Any comments?

Rare earths are not rare but are found in small deposits worldwide. Their abundance is greater than real rare elements but their need in modern electronics, etc. requires destroying large areas of land that is left unreclaimed resulting in water pollution containing toxins that can make their way into community water sources and destruction of ecosystems. The cost of refinement can be high and the runoff can be damaging. 

Great insights, thank you. So despite the show and hoopla, what "Trump" (as the latest incarnation of the powers controlling the US) is really preparing for is a meeting with the Russian Federation in order for Putin to dictate the terms of surrender concerning the former ukraine, and everything in the European theater having anything to do with that abortive, genius idea someone had to take on the Russian Army, 😂. On... their... own... turf...??
Cosmic levels of stupidity, rather. 
What's the betting the "summit" will involve "Trump" asking Putin to ask the Chinese for money, too. 
Boatloads of it. And in the meantime, the old "China is about to take over the US" narrative seems to be amping up again stateside-- in Trumptard Land, at least. Confused? That's kinda the overall idea. And you ain't seen nothing yet, y'all. Distortion on a mass scale is all that stands between the USG and the Mother of all Reality Checks. Like 2 crackheads playing Jenga, it's only ever gonna go one way.

Bloody hell, the US's goose is well and truly cooked. I honestly don't think there will be another president after Trump, the country likely won't exist before his first term is up. I wonder if you could do a similar post on China? It may not have the same problem with federal debt, but its residential and municipal debt implosion is pretty interesting.

Now is the time to employ the Michael Hudson mantra: "A debt that cannot be paid should not be paid."