Part 1: The Mathematical Impossibility
The $35 Trillion Visual: If you spent $1 million a day since Jesus was born, you still wouldn’t be close. Visualizing the un-payable number.
The Human Brain Cannot Comprehend Trillions
We hear “$35 Trillion” on the news and shrug. Our brains are not wired to understand numbers that big. Let’s break it down using time.
- 1 Million seconds is about 11 days.
- 1 Billion seconds is about 31 years.
- 1 Trillion seconds is about 31,709 years.
If you spent $1,000 every single second, it would take you over 1,000 years to spend just ONE trillion. The US debt is 35 of those. This isn’t just a “large credit card bill.” It is a number so astronomically high that it defies the laws of traditional payback methods. You cannot “work” your way out of debt this size; the math simply doesn’t allow it.
The Interest Expense Death Spiral: The terrifying moment when interest payments on the debt cost more than the Defense budget (and why we are already there).
Paying for the Privilege of Being Broke
Imagine you take out a loan, and the monthly interest payment becomes higher than your rent and food combined. You are in a “Debt Spiral.” The US government recently crossed a terrifying line: The amount we spend just to pay interest on the debt has surpassed the entire National Defense budget. We are spending more to service old debt than we are to protect the country. This creates a vicious cycle: to pay the interest, the government has to borrow more money, which creates more interest, which requires more borrowing. It is a snowball rolling down a hill, turning into an avalanche.
The “Tax the Rich” Fallacy: Running the numbers—why seizing 100% of billionaire wealth wouldn’t even fund the government for 9 months.
The Math vs. The Narrative
Politicians love to say, “We will just tax the billionaires to fix the debt.” It sounds nice, but it fails 3rd-grade math. The US government spends roughly $6 Trillion a year. The total combined wealth of every billionaire in America (Musk, Bezos, Gates, etc.) is roughly $5 Trillion. If you confiscated 100% of their wealth—took every stock, house, and car—you would fund the government for less than one year. And then you have zero billionaires left to tax next year. The deficit is structural. The hole is bigger than all the private wealth combined. Taxation is not a mathematical solution to a $35T problem.
The “Austerity” Myth: Why politicians literally cannot cut spending (Entitlements + Interest = The Unavoidable Budget).
Handcuffed by Promises
“Just cut spending!” screams the voter. But look at the pie chart. Roughly 70% of US spending is mandatory. It goes to Social Security, Medicare, and Interest on the Debt. If a politician cuts Social Security, they get voted out (or face riots). If they stop paying Interest, the country defaults and the economy collapses. That leaves “Discretionary Spending” (Defense, Education, Parks). You could cut the entire Military to $0 and still run a deficit. There is very little “fat” left to trim that wouldn’t cause immediate societal collapse. The government is handcuffed by promises made decades ago.
The Three Doors: A nation with too much debt has only three choices: Default (Hard), Austerity (Political Suicide), or Repression (Soft Default).
Pick Your Poison
When a country drowns in debt, history shows there are only three exits:
- Hard Default: Tell creditors, “We aren’t paying.” (Result: Banking collapse, depression, Argentina style).
- Austerity: Massive tax hikes and massive spending cuts. (Result: The Great Depression, riots, political revolution).
- Financial Repression (Soft Default): Print money to create inflation. Pay back the debt with money that is worth less than when you borrowed it. (Result: Everyone keeps their job, but your grocery bill doubles).
Governments always choose Door #3. It is the only path that doesn’t involve immediate chaos, even though it destroys the middle class slowly over time.
Part 2: The Art of The Soft Default
Inflation is a Feature, Not a Bug: Why the government needs inflation to stay high to burn away the real value of the debt.
The Invisible Eraser
Most people think inflation is an accident—a mistake by the Federal Reserve. What if it’s the plan? Imagine you owe someone $100,000. It takes you 5 years of work to pay that off. Now, imagine inflation happens, and wages/prices double. Now it only takes you 2.5 years to earn that $100,000. The number is the same, but the burden is half. This is how the US government plans to deal with $35 Trillion. They want to make the dollar worth less, so the debt is easier to pay back. They are “inflating away” the debt. High prices are painful for you, but they are a lifeline for Uncle Sam.
The “Negative Real Rate” Trick: How to rob savers without a gun—keeping interest rates (3%) lower than inflation (5%).
The Boiling Frog Strategy
If the government taxed your savings account by 2% every year, you would grab pitchforks and march on Washington. So instead, they use “Negative Real Rates.”
- Inflation: 5% (The value of money drops).
- Bank Interest: 3% (What you get paid).
- Result: You lose 2% of your purchasing power every year.
You feel like you are making money because your balance goes up, but you can buy fewer things. This transfer of wealth from savers (you) to debtors (the government) is the core mechanism of Financial Repression. It is a hidden tax that nobody votes for but everyone pays.
The 1945 Playbook: How the US liquidated its WWII debt not by paying it off, but by inflating it away for a decade.
We’ve Done This Before
After WWII, the US Debt-to-GDP ratio was 120% (similar to today). How did we fix it? We didn’t pay it down. We simply grew the nominal economy through inflation while keeping interest rates capped. From 1945 to 1955, inflation averaged high single digits, but bond yields were capped at 2.5%. Bondholders got crushed. They lost 30-40% of their real value. But the government’s debt load melted away relative to the size of the economy. This decade is the blueprint for the 2020s. The goal is to repeat the 1940s: sacrifice the bondholders to save the sovereign.
Captive Audiences: Why regulations force banks and pension funds to buy US Treasuries even when they lose money.
Forced Buyers
If US Bonds lose money due to inflation, why would anyone buy them? The government ensures there is always a buyer through “Prudential Regulation.” They pass laws telling banks and pension funds, “To be considered ‘safe,’ you must hold 20% of your assets in US Treasuries.” This creates a “Captive Audience.” These institutions have to buy the debt, regardless of the price or the return. It’s like a cafeteria forcing students to buy the mystery meat. This keeps the government’s borrowing costs artificially low because there is always guaranteed demand, rigged by the law.
Yield Curve Control (YCC): When the Federal Reserve prints money to buy bonds, artificially suppressing interest rates to keep the government solvent.
Rigging the Price of Money
In a free market, if inflation is 5%, lenders would demand 7% interest. But the US government can’t afford 7% interest on $35 Trillion. Enter “Yield Curve Control.” The Federal Reserve prints new money and uses it to buy government bonds. This massive buying pressure pushes interest rates down. They manipulate the market to keep rates at 4% or 3%, ensuring the government remains solvent. The side effect? All that printed money floods the economy, causing… you guessed it… more inflation. It acts as a temporary lid on a boiling pot.
Part 3: The Wealth Transfer
The “Everything Bubble”: Why stocks and real estate go up even during recessions (The flight from devaluing cash).
The Monetary Illusion
Have you noticed that the stock market keeps hitting all-time highs even when the economy seems shaky? This isn’t because companies are selling more widgets; it’s because the dollar is worth less. If the denominator (Money) collapses, the numerator (Asset Price) goes up. This creates an “Everything Bubble.” Houses, stocks, gold, and collectibles all rise together. It looks like “Growth,” but it is actually “Devaluation.” People are fleeing the currency and parking their wealth in anything that is scarce. The price signals are broken; high prices reflect a weak currency, not a strong asset.
The Cantillon Effect: How money printing enriches the people close to the printer (Wall St) and impoverishes those furthest away (Wage Earners).
The Waterfall of Wealth
When the Fed prints $1 Trillion, they don’t drop it from helicopters equally. They give it to big banks and the government. These “first receivers” get to spend the money before inflation hits. They buy stocks and houses at yesterday’s prices. By the time that money trickles down to you (in your wages), prices have already risen. The rich get the asset inflation; the poor get the grocery inflation. This is the “Cantillon Effect” (named after an 18th-century economist). It explains why wealth inequality explodes during periods of financial repression.
The K-Shaped Society: Why asset owners get richer and renters get poorer during periods of repression.
The Great Divide
Financial Repression splits society into two groups: The “Haves” (Asset Owners) and the “Have-Nots” (Wage Earners).
- The Asset Owner: Owns a house with a fixed-rate mortgage. Inflation makes their debt easier to pay, and their house value goes up. They win.
- The Wage Earner: Owns nothing. Rents. Wages rarely keep up with inflation. Their rent goes up, food goes up, gas goes up. They lose.
This “K-Shaped” divergence destroys social cohesion. It creates a reality where half the country feels rich and the other half feels like they are drowning, purely based on whether they own assets that hedge against inflation.
Shrinkflation & Quality Fade: Hidden inflation—why your candy bar is smaller and your appliances break faster.
The Stealth Tax
Companies know you will stop buying if they raise the price of chips to $10. So instead, they keep the price at $5 but shrink the bag from 16oz to 12oz. This is “Shrinkflation.” Even worse is “Quality Fade.” To keep costs down, manufacturers use cheaper plastic, thinner metal, and worse ingredients. Your washing machine used to last 20 years; now it lasts 5. This is hidden inflation. The official government statistics (CPI) often miss this. They measure the price, but they don’t measure the fact that you are getting less product and worse quality for your money.
Part 4: The Event Horizon
Fiscal Dominance: The point of no return where the Fed loses control and must print simply to pay government bills.
The Checkmate
Traditionally, the Federal Reserve fights inflation by raising interest rates. But “Fiscal Dominance” is the moment when the Debt is so big that the Fed cannot raise rates. If they raise rates to fight inflation, the interest on the debt bankrupts the government. So they are forced to print money to pay the government’s bills, which causes more inflation. The Central Bank loses its independence. It becomes a servant of the Treasury. This is the endgame of the $35 Trillion Elephant—the moment monetary policy becomes irrelevant because the Debt is the only thing that matters.
The Bond Vigilante Revolt: What happens if the world stops buying US Debt? (The UK “Liz Truss” moment explained).
When the Market Says “No”
The US relies on foreigners (China, Japan) to buy our debt. What if they stop? If buyers go on strike, interest rates spike uncontrollably. We saw a preview of this in the UK in 2022. Prime Minister Liz Truss proposed unfunded spending. The bond market panicked, rates spiked, and the economy almost collapsed overnight. She lasted 44 days. The US is risking a similar moment. If “Bond Vigilantes” decide the US is insolvent, they will sell Treasuries, sending rates to the moon and forcing the Fed to print trillions to save the system, triggering massive inflation.
CBDCs (Central Bank Digital Currencies): The ultimate tool for repression—negative interest rates and expiring money.
Programmable Money
How do you force people to spend when they want to save? Enter CBDCs. Unlike cash, a Digital Dollar is programmable. The government could theoretically program it to have a “negative interest rate” (your balance shrinks every month) or an “expiration date” (spend it by Friday or it vanishes). This is the ultimate tool for Financial Repression. It eliminates the ability to “opt out” by holding physical cash under your mattress. It gives the state total control over the velocity of money, ensuring they can force consumption and negative rates whenever the debt burden gets too heavy.
The Exit Valve: Why Gold and Bitcoin are structurally designed to escape the repression trap.
Outside the System
If the system is designed to debase the currency, the only winning move is to exit the currency. Gold has been the exit valve for 5,000 years because it cannot be printed. Bitcoin is the digital evolution—an asset with a hard cap (21 Million) that no government controls. These assets are “Counter-Party Free.” They don’t rely on the government’s promise to pay. In a world of Financial Repression, assets that cannot be diluted become the primary lifeboat for preserving purchasing power against the silent default.
The Great Reset (Financial): Historical precedents for currency reform—when the zeros get knocked off the bills.
The New Dollar
How does it end? Historically, when a currency gets too debased, the government hits “Reset.” They introduce a “New Dollar.” Maybe 1 New Dollar = 10 Old Dollars. They might peg it to gold or a basket of commodities to restore trust. This happened in France, Germany, and Brazil. It is a painful transition where debt is restructured and savings are often wiped out. The $35 Trillion debt likely won’t ever be paid off in “2024 Dollars.” It will be paid off in “Future Dollars” that are worth pennies, or wiped away in a currency reform that resets the global financial board.