“It’s the highest since 1981.”
I’m sure you read that headline a dozen times today. It’s completely empty, because:
# THE INTEREST RATE IN 1981 WAS 20%
Yes, 20%, and also:
# THE FEDERAL DEBT IN 1981 WAS $980B
That’s right, it hadn’t even broke $1T yet, and lastly:
# FOREIGN DEMAND FOR TREASURIES IN 1981 WAS GROWING
Compare all the above to today. We have 0% interest rates, $31T in debt, foreign demand for Treasuries peaked in 2017 and has been declining since. You really have to ask yourselves how the USD is not trapped. There’s no way out of this. None. If you raised rates even to 3% (one-third of inflation) the annual interest alone on that would be the size of a Covid bill. This is the boldest tweet of 2021:
And there’s no situation where that doesn’t happen in the next 24 months IMO. When a currency goes hyper, there’s no coming back from it. Taming inflation doesn’t mean prices go down. It means prices stop going up. But when trust starts to erode, the faux ways to stop it from accelerating are revolution, or retiring anybody that can say otherwise, which traditionally is accomplished through war. The problem being of course, that we can’t have any direct conflict with a major power, because if we did, we’d go hyper instantly. $120 bbl oil and $9 natural gas would turn into $300 oil and $20 natural gas. Such a thing would cost trillions waging and trillions in losses. And this is my greatest fear from a game theory perspective–that China does a naval blockade on Taiwan before the People’s Congress which decides Xi Jinping’s political future. Whoever owns Taiwan owns the 21st century. If you’re China you can force the US into one of two terminus decisions this late in the debt cycle:
* Go to war and go hyper, with no guarantee of victory
* Don’t go to war and lose the 21st century
[ https://youtu.be/p6sCsOdqXQw](https://youtu.be/p6sCsOdqXQw)
**Conclusion:**
But unlike any point heretofore dear reader, there’s an asset waiting in the shadows, and it can step out from the shadows for anybody anywhere as a capital flight release valve, and governments have no ability to stop their citizens from opting-out and saving themselves. ₿