There's No Plan To Pay The $40 Trillion Debt — The Plan Is To Steal It From Your Savings

The US government owes $39 trillion. There's no plan to pay it back. Instead, they plan to steal it all from you. I mean that literally. The debt hit $39.28 trillion last week, and that works out to about $115,000 for every single person in the country. It grows by roughly $9 billion a day and it will cross $40 trillion around September this year. The government will spend more than a trillion just on the interest and at the current elevated interest rates if we don't do something beginning immediately. The roughly $10 trillion that we have to refinance this year will eat the country alive. The interest alone is already more than we spend on the entire US military. Inflation is already running hot, but we can't cut rates. At least not yet, for reasons that I'm going to explain. So, what do we do? Given that the mess in Iran just made the AI growth strategy that much more improbable, what is likely to be the strategy? Well, last month, Kevin Walsh became the new chairman of the Federal Reserve. I want Kevin to be totally independent. >> No, he doesn't. He threatened to fire, sue, andor indict the last Fed chair because he needs someone with a plan to get America out of the mess we've been making since 1913. And my belief is that Wsh and Trump have that plan together. It's a wealth pump built to siphon the debt repayment out of your pocket without you being able to track the missing dollars. and they know exactly how to turn the pump on and hide it from you. In this video, we're going to go through their plan step by step and then talk about how you avoid falling out of a financial window like a Russian general who just upset Putin. That's a real clip, by the way. And let it serve as your reminder to stay through the end. We've got three parts. They all matter, especially the end, where I'm going to show you how to make sure you end up on the right side of this wealth bump. Don't skip around this time. Welcome to part one. There are only two ways out. In January, the president's justice department opened a criminal investigation into the sitting chairman of the Federal Reserve, Jerome Powell. Why? Because the Fed's renovation of their headquarters ran roughly $600 million over budget. The Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. What's wild is that the same president, whose DOJ criminally investigated Powell over renovation overruns, is currently running over budget on the White House ballroom by $400 million. Trump didn't go after Powell because of the overrun. He went after Powell because he wanted him on the same page as Trump. He wanted him to run the playbook that Walsh is now going to run. [music] So if you're WS, there's no way that you took this job unless you think you're already rowing in the same direction as the president. So the question becomes, what direction is that? Let's look at the options. The government owes $39 trillion with $9.7 trillion of it coming due this year. You strip away the noise and there are only two ways out of this mess that are politically viable in a populist moment. One, you grow your way out. Or [music] two, you inflate your way out. There's no secret menu. Radalio's been telling people for years to do what he calls a beautiful deleveraging, but that is politically untenable right now. So, whatever WASH is going to do, it's going to be aiming at one of the two paths that I just mentioned. Growth is what everyone wants, of course, but it becomes less likely with each passing day. Wsh and Trump are both looking at AI like a baby looks at boobs. The logic goes something like this. Artificial intelligence makes workers and companies far more productive. More gets produced with the same number of people. And when you produce more for less, prices will fall on their own. And if prices are falling because of productivity, the Fed can cut interest rates without kicking off inflation. The debt then shrinks against a bigger, faster growing economy. That's what everyone wants. Wsh has said that his whole plan in coming into the Fed hinges on AI being deflationary. And I think a big part of why Trump went ass over tea kettle into Iran was because he wanted to secure those $2 trillion in Gulf AI infrastructure investment promises while simultaneously trying to slow China down to deny them cheap oil and win the AI race. That's the growth strategy. If it worked, it would be awesome. But now that Iran has blown up and AI revenue is coming in much much slower than AI infrastructure costs are absolutely exploding. I think the growth strategy becomes more of a long-term hopeful play and is far less likely to help right now when it's needed. If you want my full thoughts on how AI is going to play out, make sure you watch this video here. As for why Iran matters, Iran is the blade that cuts twice in this moment. First, the closing of the straight of four moves has pushed oil prices up higher already. And if the extraordinarily fragile onagain off-again ceasefire ultimately falls apart, those higher energy costs will act exactly like inflation, driving the price of almost everything up. That's why Trump is so desperate to end the Iran war. At least one of the reasons. Not only does he not want people to die if he can't get the straight open, he risks setting off a global recession that will make it n impossible to get out from under the crushing $40 trillion in debt without catastrophic economic consequences. Now, if he can bring the conflict in Iran to an end and quickly and then oil prices come back down, inflation will likely slow or even also come back down. And with lower inflation, at least then the Fed can credibly cut rates without giving the game away that Trump and WSH are on the same page. So, as of now, the war is the single biggest thing standing between Trump's administration and the cheap money it needs to refinance the debt and buy themselves enough time to slowly debase the currency. The second cut that the war in Iran delivers is that now that the region has suffered so much infrastructure damage and is less secure than it was six months ago, the odds that the GCC nations who promised the $2 trillion will be as quick to actually invest in the US have dropped dramatically. They'll likely need to preserve their capital for repairs and defense spending. So if the goal is growth, but the growth is coming slowly while the debt is compounding fast, what do you actually do? Where can WSH and Trump actually row the boat that's advantageous to America? You could simply default on the debt. That would be honest, but they're never going to do that. It is way too politically destructive and it's quite honestly absolutely horrible for America's future. You could also cut budgets and run a Malay Argentinian style playbook here in America. But that's also political suicide because nobody wants less free stuff. So if growth is shaky and you can't cut, that leaves you with one option. You steal via inflation. There's a twist. W knows he needs to lower rates, but if he lowers them now, he knows he looks like a puppet and he knows that he and Trump will get torn to shreds. It will be way too obvious that the Fed is no longer independent. So he has to hold steady for now to buy time. >> The committee decided to maintain the target range for the Fed funds rate at 3 12 to 3 and 3/4%. >> And with a little extra time in aside, he praised he praised that Trump can get a favorable deal done in Iran because if the price of oil really does come down, then inflation will come down [music] and then as the inflation is dropping, he can cut. Not because Trump is pressuring him to, though he [music] is, but because the market conditions are perfect for it. So if Trump seems in a rush, almost irrationally so, to get a deal done in Iran, now you know one of the key reasons. It is a pillar of the strategy to deal with our debt. Being able to cut rates is also a key part of WSH and Trump's strategy for inflating the debt away, but without getting caught red-handed. Because if they do it in an obvious way, the pitchforks will come out. So, they have to row the boat in a very specific direction that gives them a very strong cover story for why they're cutting rates. They have to bury the quantitative easing deep enough that it can't be seen and where you filthy plebs can't stop them from doing it without changing the whole banking system. But how on earth are they going to do that? Welcome to part two. control what you show them to control what they see. Worsh wants to change things up, or so he says. He wants to modernize how we measure inflation. But his preferred inflation gauge just happens to read 2.3% while the Fed's traditional way of measuring inflation reads over 3%. But I would like to remind everyone, where you place the ruler may change the length of your penis on paper, but it does not change anything in the bedroom. And that's why Goldart's law is so important to understand. It [music] states that when a measure becomes a target, it ceases to be a good measure. This is extremely true on inflation. Why? Because the Fed has a target inflation rate and they will change the measurement in any way possible to ensure that they get the result that they want. especially if the Wsh and Trump admin are aligned on their long-term goal and are truly rowing in the same direction towards devaluing the dollar as a method of reducing the debt. To be clear, data manipulation is nothing new to the Fed under WASH. The Fed has been doing it for years, regardless of who's in control. But during his confirmation hearing, Walsh signaled very clearly that he prefers a trimmed meanth of measuring inflation. And during his first FOMC meeting, he indicated that he would be convening different task forces to assess how the Fed operates. And wouldn't you know it, one of those task forces will be focused on how inflation itself is measured. And another one is going to be focused on how the data itself is collected, [music] leaning towards something that is closer to real time than what we have now. Now listen, he's not wrong to want a real-time picture of inflation and to use modern technology like AI to get it, but he is out of his mind to use a trimmed mean PCE that will frequently pull the cost of energy out of the equation. That's insane. Energy is so foundational. Now, look, it is entirely possible that Worsh has only good intentions and is really just trying to modernize the Fed. But it is also possible that this is all part of a larger strategy to manage the debt. We'll be back to the show in just a second, but first let's talk about a line in [music] the IRS tax code most people do not fully use. Over 40 million Americans have HSA accounts holding $159 billion in pre-tax money. The average account holds around $4,000. [music] And most of those dollars go towards routine costs like doctor's visits and prescriptions, but that's only a fraction of what's actually eligible. That's where True Med comes [music] in. 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And that trim mean measure can exclude much of the impact of tariffs and energy shocks. two of Trump's specialties, the very things that if you take out at this moment in time, you're literally just trying to manipulate the number. In my opinion, given the absolutely catastrophic nature of the looming debt, it is impossible for us to analyze this situation honestly without acknowledging that even if Worsh's [music] pursuit of a new data and measurement paradigm isn't specifically designed to paint an artificially rosier picture of inflation, it [music] will still likely do exactly that. the trim mean method that he prefers already shows lower inflation [music] right now today as of the latest reading trim mean PCE was running about 2.3% while core PCE was at 3% despite headline CPI being at a shocking 4.2% 2% more than double the target inflation rate. The trimmed gauges are at or very near multi-year lows. And I just cannot imagine why WASH would prefer to use the trim mean PCE given that. And what's really wild is that even the Dallas Fed, which is the organization that builds the trim mean report, warned specifically that the trim means currently lower reading may not be strong evidence of disinflation coming ahead. So the very people who make the gauge are telling you it's probably understating inflation right now. Additionally, the timing of the data regime change is just way too coincidental for what is politically expedient. WASH [music] expects this to be a largely decided change by fall and then fully implemented by the end of the year. This would perfectly match the timing of the midterms, at which point a rate cut would be maximally beneficial to guess who? Donald J. Trump. It of course still requires Trump to get a deal done in Iran ASAP. This is for two reasons. First, data manipulation will only get you so far if a prolonged closure of the straight of horror moves sends the entire world into an economic tail spin. So that obviously has to be avoided. And second, you need to get energy prices down sooner rather than later to give inflation time to actually come back down before the midterms so that Walsh can cut. [music] If oil is already down, bringing inflation with it, and you switch to a new measurement paradigm, at that point, that makes it even lower, suddenly the data really does make it look like it's time to cut. Now, when you control the data, you control the narrative. So, keep your eye on what WASH does, both with data collection and data interpretation, and watch how hard Trump goes to get the straight back open. That will help you track the direction that they're headed in. and their cover story that they're using to explain why exactly they would go in that direction. But the cover story and the direction of travel are only going to tell you what they [music] want to do. It doesn't tell you how they're going to actually do it. For that, you need to understand the wealth pump that they're building so you can see how people's wealth is going to be siphoned without them even knowing it. Welcome to part three, the invisible money printer. Go Burr. A single crypto company, Tether, holds roughly $17 billion dollar in US treasuries. That makes it roughly the 18th largest holder of US government debt in the world. It owns more of America's debt than Germany. Why is that worth noting? Because this year, the government has to sell that nearly $10 trillion in debt that we talked about to roll things forward. The Fed says it wants to reduce its balance sheet so it can't buy the debt as it's done historically when other people aren't there to pick it up. But I think this is incredibly wise because if the Fed just loads up a bunch of debt on its balance sheet to create artificial interest in the debt, that is going to really piss taxpayers off. They have gotten way too wise to that strategy for it to work again without causing massive political backlash. Plus, a shrinking balance sheet says, "See, look, we're not money printing." So, given that, who's going to pick up the debt? Someone has to. And foreign governments have made it clear that they're not going to be the ones to do it anymore. We have been far too abusive to dollar holders. We sanction anyone we can and we deficit spend with reckless abandon, making it entirely too obvious to anybody that understands the economy that we are indeed going to inflate our way out of the debt. So, anyone that holds that debt is going to be paid back in way weaker dollars. So, who has the incentive to buy US treasuries at the interest [music] rates the government can actually afford to pay? The honest answer is no one, unless they're forced to. But who can the government actually force to buy their debt? Well, I'm glad you asked. Compelled by our number one is the banks. On April 1st, a rule called the supplementary leverage ratio got loosened for America's biggest banks. [music] In plain English, regulators cut how much capital banks are required to hold in reserve by about [music] 28%. That is massive. Now, why does that force them to buy treasuries? Because the bank can't just let the capital sit around. If they don't have to hold it in reserve, they are going to put it to work. But there are all kinds of regulations about what [music] they can actually own. And everything that they can own gets a risk score. And the banks have to keep their risk score as low as possible. And guess what asset carries a zero risk score? That's right, US Treasuries. By one estimate, this will free up banks to consume [music] about $3 trillion in additional treasuries, which is roughly 9% [music] of the entire market. Man, if you're looking to create appetite for your treasuries, that's pretty good. Now, who is compelled buyer number two? Stable coins. People like Tether. In July, Trump signed the Genius Act. By law, every compliant stable coin in America now has to be backed one for one by cash and/or short-term US treasuries. So, every single dollar that flows into a stable coin becomes a forced purchase of government debt. That market is already about $300 billion today. And Wall Street expects it to reach 1 to3 trillion within just a few years. That's why Tether holds more treasuries than [music] Germany. And if the Wall Street projections are right, they've only just begun their buying spree. And when you put those things together, that's how this magic trick is done. If the Fed runs the QE playbook of old, and buys government debt, the whole world calls it what it is, money printing, creating money out of thin air. They freak out, get very angry. They see a repeat of 2008. They know you're robbing from the poor to give to the rich. But when a bank buys that same debt creates that same appetite, the money from nothing slide of hand still happens, but it's buried a layer deeper. And because of that, it effectively becomes invisible. It's not necessarily that no one sees it. Savvy people are going to know it's happening, but it's even harder to understand than normal money printing. First, money creation through debt is actually the only way that money is created. Full stop. So given the system that we have, it's necessary. You have to do it. So it's not artificial demand for debt per se like it is when the Fed is buying the debt. It's debt created when people and businesses actually want to borrow. So there's real demand for that debt. So when asked, the Fed is going to be able to point to their perfect cover story and say, "We're not printing money. We're supporting businesses and that's going to help us on our mandate to achieve maximum employment. this is what you've asked us to do. And in some ways, it's true. But it's also true that it is money printing just from another type of press. And that printer really does go burr. If every person in every company that borrows money were able to magically create an equal amount of high-value goods and services to buy, then [music] there wouldn't be any inflation. But if they don't, then there will be. And spoiler alert, they won't be able to. creating things of value is just too hard and the government actually needs the inflation to weaken the dollar to make that looming $40 trillion and growing debt easier to pay off. So you can absolutely count on there being enough new money created that inflation, however it is measured, steals purchasing power. And the more purchasing power the government is able to steal through inflation, the lighter the debt burden becomes. Follow the incentives. Now, this isn't going to happen in one overnight flood. It'll be a gradual build. But the direction that Trump and Wash are rowing the boat is locked in. It has to be. The people who own assets, [music] stock, real estate, gold, Bitcoin, Pokemon, they're all going to watch their assets climb. And the people who only hold dollars will watch their lives get harder and never quite understand why. The rich are going to keep getting richer, the poor are going to keep getting poorer, and the debt will in fact get paid down by you. and everyone that holds dollars. That is the wealth pump. There was almost certainly never a sincere plan to pay off the US debt. I hate that that is true, but that's the way that it goes at this stage in an empire's life. In every latestage empire, when you're the reserve currency and you're in decline and locked in populism the way that we are now, the only plan that ever gets implemented is the one where the debt burden is forced upon the people in a way where the average person just can't see it happening. So expect wash to hold rates steady for [music] now to look tough to pick a new data regime to control the narrative and make inflation look lower than it is quite frankly. and then work with the Trump administration to create a regulatory environment that forces massive entities [music] like banks and crypto to mop up the debt market and make it harder to track why the dollar grows weaker every day as you inject new inflationary money into the system via highly desired but overly cheap debt. So, here's where all of this leaves you. As a country, we have to contend with the debt. We can't ignore it. And the solution was always going to hurt. Now, I'll be honest. It does not need to be the purchasing power siphon that I've been describing here, but the pump is already running. So, here we are. But it's critical to note that this plan only works if the government slows the rate at which it expands the national debt. You cannot inflate away a debt that's growing faster than you can safely debase the currency. If you go too fast, instead of bleeding people out slowly where they don't really notice, you break the economy and people riot. So, expect Trump and Walsh to avoid that. Now, even if we embrace the way that Trump and Walsh are going to deal with the debt, it's still not going to be easy. The last time we were able to inflate away an otherwise unmanageable debt burden was after World War II. And what did that time period show us we can expect now? Slowing the borrowing is critical. And you have to also practice something called yield curve control to ensure the interest payments don't rise in lock step with inflation which would stop the debt from being eroded by inflation. So as you plan make sure you price in financial repression via yield curve control. The Fed will hold interest rates below the rate of inflation so that the dollar loses value a little faster than the interest payments that the government has to pay on the debt will grow. This will cause them to force the banks and the crypto industry to soak up the debt as a way of ensuring there's enough natural demand for debt that those rates don't have to be artificially crushed down too far, which would give the game away. This is the same trick that Japan has been using for the better part of a decade. Now, because of all of that, my go forward plan looks something like this. I'm not going to be sitting in dollars, at least not beyond my emergency fund. And I'm trying to remember that long-term debt is likely to now carry additional risk. So, I've got to make sure if I'm going to hold it that I get an appropriate premium. I know I can't effectively time the market. So, I'm just planning for the long game. Plus, the last time that this kind of wealth extraction pump ran, it ran for decades. Literally, from the mid 1940s until the 1980s, for however long the pump runs, everyone has to understand that their purchasing power is going to be stolen from them. But only asset holders with the stomach for risk have a chance of beating inflation. And my goal as I build out my plan is to end up on the right side of the wealth pump. I'm also going to be watching for the tell when the dollar slides while stocks, gold, crypto, Pokemon, assets like that climb together. I'm going to recognize that's not a boom. That is just the wealth siphon hard at work. As always, if I really want to outpace the true inflation and erosion of the dollar, I've got to find assets that are based on true innovation. Those are the only things that deliver returns over the long haul. I'm going to go broad and I'm going to try not to be clever. When I'm at my most certain, I know I am at my most at risk. Now, if you do all of that, you can avoid ending up looking like this guy. All right, if you want to watch me explore topics like this in real time, be sure to hit that subscribe button and join me Monday, Wednesday, and Friday at 7 a.m. Pacific time. I hope to see you there. Take care. Peace. If you like this conversation, check out this episode to learn more. Elon Musk is now worth more than the next four richest people on the planet combined and more than the bottom half of every household in America put together. But the people