The following article and series of charts / graphs should scare the living day lights out of you, if you don’t already have a general idea how artifically low interest rates and the “U.S debt situation” fit together.
Shocking when you consider that net interest costs will double in five years, and triple in eight.
So…….The Fed is gonna hold rates at zero forever then?
Impossible.
The Federal Reserve’s Impossible Equation: When Math Meets Reality
Let’s strip away the Fed’s fancy rhetoric and look at the cold, hard numbers. When interest costs are set to double within five years and triple within eight, we’re not talking about some distant economic theory – we’re staring down the barrel of fiscal Armageddon. The Federal Reserve has painted itself into a corner so tight that every move forward accelerates the collapse they’re desperately trying to avoid.
The Zero-Rate Trap That’s Swallowing America
Here’s what Yellen and Powell don’t want you to understand: artificially suppressed interest rates aren’t just an economic policy tool – they’re life support for a terminally ill financial system. Every day rates stay near zero, the debt monster grows larger and hungrier. The government has become addicted to cheap money like a junkie needs his next fix.
But here’s the kicker – they can’t keep rates at zero forever without destroying the dollar’s credibility entirely. Foreign central banks are already questioning whether holding U.S. Treasuries makes sense when the purchasing power gets inflated away year after year. We’re witnessing the early stages of what will become a full-scale dollar collapse if this trajectory continues.
The Mathematics of Financial Suicide
Do the math yourself. If net interest costs double in five years while the Fed maintains their “accommodative” stance, where exactly does that money come from? The only options are: print more money (hello hyperinflation), raise taxes to economically crushing levels, or default. There’s no fourth option hiding behind some academic theory.
The debt-to-GDP ratio has already crossed into territory that historically signals the end game for empires. When servicing debt becomes the primary function of government rather than governing, you’re looking at systemic breakdown. The Fed knows this. Wall Street knows this. The question is whether retail investors and everyday Americans will figure it out before their savings get vaporized.
Currency Wars and the Coming Reset
While the Fed plays pretend with interest rates, other nations are preparing for the post-dollar world. China’s accumulating gold at record pace. Russia’s building alternative payment systems. Even traditional U.S. allies are quietly diversifying away from dollar reserves.
This isn’t conspiracy theory – it’s economic survival. When the world’s reserve currency is being deliberately debased through monetary policy, smart money doesn’t sit around waiting for permission to protect itself. The signs are everywhere if you know where to look, from precious metals accumulation to bilateral trade agreements that bypass the dollar entirely.
What Happens When the Music Stops
The Fed’s impossible equation has a simple solution – it doesn’t. Something has to give, and it won’t be pretty. Either interest rates eventually rise and crush the government’s ability to service debt, or they keep rates low and watch the dollar lose reserve currency status through inflation and loss of confidence.
Both scenarios end the same way: massive wealth transfer from savers to debtors, from the middle class to the financial elite, from dollar holders to real asset owners. The Fed isn’t trying to solve this problem – they’re trying to manage the controlled demolition of the existing monetary system while protecting their buddies on Wall Street.
The smart money isn’t asking if this system will collapse – they’re positioning for what comes after. Currency crises don’t announce themselves with press releases. They arrive suddenly, violently, and completely reshape the economic landscape overnight. The math is already written on the wall. The only question left is whether you’ll be ready when it becomes undeniable to everyone else.
Not saying you may be wrong, I wouldn’t dare, but Japan hasn’t done too bad keeping rates low for quite some time now
No question….and you bet.
But can The U.S afford to go the road of Japan? 15 years of essentially going nowhere?
Damn thing is….Japan is such a unique example as their demographics / situation is so different than that of The U.S.
Looking at Japan as a “model” (after countless currency interventions and now the biggest QE on Earth ) I can’t imagine “any country” looking to go that route but…..
Perhaps we “are indeed” in the NEW NORMAL here….and The Fed will just keep kicking the can.
I imagine something “larger than The Fed” will come along and knock the wind out of this thing regardless.
They don’t control the bond market….not in the slightest.
Great stuff man…appreciate the input.
My only concern with this general consensus view, is that it ignores other countries. The fact that pretty much all are in the same boat today (admittedly with different technicalities, I’m lumping both sovereign and corporate debt here), would suggest to me that the US bond market can’t be knocked without a much larger knock-on effect onto other countries. The other primary aspect, imho, which is often neglected in discussions is that the US remains the only capital market capable of absorbing massive flows. Until this changes, I find it hard to see a bond sell-off of a large magnitude occurring in the US. For this reason, the only scenario I can envisage is a global monetary crisis which is not as improbable as many believe. it has happened many times before….
Im with you as EU concerns can easily jump to the front page anytime soon..and indeed create something “global”.
Left “solely to their own” I’m sure The U.S can keep the boat afloat through one program or another…but as you’ve suggested – this is “global” so…..a domino falls….and many fall in turn.