(International Man)—Contrary to conventional wisdom, higher interest rates mean more inflation in the environment today.
That’s because the federal interest expense increases as interest rates rise. As the federal interest expense rises, so does the budget deficit. As the budget deficit increases, so does the currency debasement needed to finance it. Skyrocketing interest expense will have an enormous impact on the US budget.
Even according to the US government’s rosy projections, the interest expense on the federal debt will exceed $1 trillion for the first time in 2024… and it shows no sign of slowing down. On the contrary, it’s growing exponentially.
First, it’s essential to understand the basics of the US federal budget. Let’s zoom out and look at the largest components of the US federal budget from the latest available data in the chart below.
The biggest expenditures for the US government are so-called entitlements. It’s not likely any politician will cut these. On the contrary, I expect them to continue to grow.
With the most precarious geopolitical situation since World War 2, so-called “National Defense” seems unlikely to be cut. Instead, military spending is all but certain to increase. Income Security is a catch-all category for different types of welfare. That’s unlikely to be cut too.
Unless it becomes politically acceptable to cut things like Social Security, military spending, and welfare, efforts to make a dent in expenditures won’t be meaningful. Further, interest expense (Net Interest above) is set to explode higher.
The US government projects that the federal interest expense will exceed $1 trillion in 2024 for the first time. That means the interest expense will exceed defense and everything else in the budget except for Social Security, which it will also likely exceed soon.
As the cost of debt service is taking up a larger portion of the budget, there is less for other expenditures. That means the government has to borrow increasingly larger amounts to maintain basic functions. However, it’s worse than issuing more debt to cover Social Security and the military.
The US government is now borrowing money to pay interest on the federal debt, which has a compounding effect as the federal debt and interest expense grow exponentially.
I suspect we are close to the inflection point where it gets out of control. 2024 could be the year that it becomes evident the US is trapped in a debt spiral.
Here’s the bottom line with the budget. The most significant expenditures have nowhere to go but up. But don’t count on increased revenue to offset these increases. Even if tax rates went to 100%, it would not be enough to stop the deficits—and the debt needed to finance them—from growing.
The US government is out of options. Therefore, the question is not whether it will default but how. When faced with a choice, politicians always choose the most expedient option. In this case, that means issuing more debt rather than making tough budget decisions or explicitly defaulting.
There is a big problem with that, though. As the amount of debt skyrockets, the interest rate rises to entice buyers and holders.
Allowing interest rates to rise high enough to entice natural buyers would bankrupt the US government because of the higher interest costs, which are set to become the largest item in the budget.
So, I would not expect the Fed to raise interest rates much more. In fact, they have already paused the rate hikes and are signaling a pivot to easing again, likely for this exact reason.
That means the Fed has effectively given up on bringing price inflation down even though the year-over-year change in the CPI remains above 4%, more than double the Fed’s target of 2%.
In other words, even with their own crooked statistics and rigged game, the Fed has failed even to come close to their inflation target. It’s a massive failure. Bloomberg is already hailing it “The Great Monetary Pivot of 2024.”
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It’s crucial to understand that by surrendering to inflation, the Fed is returning to the same policies that caused prices to rise in the first place.
So, if higher interest rates are off the table and cannot entice more natural buyers, who will finance these growing multi-trillion dollar budget deficits? The only entity capable is the Federal Reserve, which buys Treasuries with dollars it creates out of thin air.
That’s why I am convinced extreme currency debasement is the inevitable outcome.
All the rest is noise.
The US government’s only practical option is ever-increasing currency debasement… and it could devastate most people.
I suspect it will all go down soon… and it won’t be pretty.
It will result in an enormous wealth transfer from savers and regular people to the parasitic class—politicians, central bankers, and those connected to them.
Countless millions throughout history were wiped out financially—or worse—because they failed to see the correct Big Picture as their governments went bankrupt.
Don’t be one of them.
That’s exactly why I just released an urgent new report with all the details, including what you must do to prepare.
It’s called The Most Dangerous Economic Crisis in 100 Years… the Top 3 Strategies You Need Right Now.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
Over time, the value of those entitlement checks are being inflated away. A social security check, for example, buys half to two thirds what it bought three years ago. That should have a balancing effect, and be fairly self-correcting. It’s partly, in addition to changing inflation calculation methods, how Clinton and Gingrich had a projected balanced budget, which never materialized. Other factors, such as the addition of more people to the system via immigration as well as more citizens driven into it, nullify that correction mechanism.
You don’t have to cut entitlements if you implement policies that increase economic activity, and get the economic engine going, which in turn pulls people up out of the safety net, such that more are paying into it rather than taking from it.
I’m no expert but it seems to me, when it comes to monetary policy, if you have to err you should err on the side of lower interest rates, because of the dynamics involved. This is why Trump pressured them to keep interest rates down. As much as people don’t like him, and I don’t like him either, particularly his embrace of the porneia agenda, he does understand the simple dynamics.
It’s clear to me that what is most working to constrain economic activity is environmentalism and the climate change agenda. It’s the war on “stuff”. It’s the war on waste. It’s the notion that we all must have and do the least possible required to survive. It’s the idea that increased economic activity is a bad thing. The constraining effect is tremendous. And of course, on a deep level, that is rooted in a belief in atheistic origins, the rejection of the Creator, and the notion that this planet and all life upon it is just a weak, fragile, accident that would all cease to exist at the touch of a feather. Rather than being good stewards of nature, as God commands, people are afraid that barely touching that fragile accident will lead to destruction and the end of all life on Earth. Of all “forces” constraining economic activity, that has to be the foremost, by far, in my opinion. Second would be all the porneia mess. People are rightly fed up with it. People are afraid of that also. it’s not entirely quantifiable, but I’d wager millions have set aside plans to start businesses, or engage in other economic activity, for fear of being targeted and sued into poverty by the porneia mafia. I know I have avoided certain business endeavors, waiting for the courts to make final decisions as to whether or not matters of conscience will be respected. Another is crime. The more crime that goes unpunished, the less economic activity there will be in those areas. Businesses will close the doors and leave.
And you have certain billionaires pushing a lot of it because they’re gaining wealth as a result. The transfer of wealth is not dependent on economic activity, and is not always measured in dollars and cents. In many ways they gain more from slower economies.
Republicans need to do a better job of explaining these dynamics. Don’t just say you’re against it. Explain why you’re against it. And explain how you’re not against the little guy. If you look like a bunch of establishment, blue-blood rich people, who got rich off the backs of the poor, just out there bellyaching about having to pay taxes, that won’t work. And this is why Trump resonates. He understands all those dynamics, and he’s not out there treating the poor and middle class like they’re his enemy, based on a static snapshot.
And to point at both sides, politics itself is a major constraining force. Baseball is no longer America’s game. It’s politics. The more divisive things get, the more constricting that is on the economy, especially when the agendas of each side are as extremely divergent as they are now. In addition to wasting time, reducing productivity, reducing quality, getting caught up in the fight, businesses also sit on their hands waiting to see which side is going to call the shots for the next four years. We can’t ignore the negative influence of politics itself.
Then there’s abortion. Slaughtering 70 million of our offspring certainly hasn’t been good for the economy.
There are many factors. But when you boil it down, it’s mostly the consequences of sin.
We look back and say things were better back in the 40’s and 50’s, up into the 60’s.
Well no kidding. By and large, they were better people.
And they had incentive to work toward their own vision for the future for themselves and their posterity, with reasonable expectations that they would be able to keep and enjoy the fruits of their labor, rather than working, as slaves, for and toward the Utopian, collectivist vision of someone else. Which is what the WEF idiots don’t understand. It wouldn’t matter if they were right about every issue in existence, it’s still not their call. It’s not their place. People want to work toward their own vision for the future, not the vision of bill gates and klaus schwab.