Debtberg – Dead Ahead!

Last week we wrote again about the private credit picture and the likelihood that it starts a frightening cascade of market failures across the U.S. and global economy.

If that happens you will be very glad indeed that you own enough gold and silver.

But private credit is just one of the vulnerabilities that is in sharp focus now as Scott Bessent and the U.S. Treasury scramble to get ahead of Washington’s debt spiral.

The visible portion of Washington’s debt rolled right past $40 trillion dollars only days ago, and as we suggested, breaking through that benchmark was enough to catch the bond market’s attention.Rates rushed higher.

But as you would expect, Washington made not so much as a move to control the spending that is piling up the debt.  We have collected a few images of what it is doing instead:

• It is spraying deodorant all over itself in hopes of masking the stench of the debut.  It doesn’t seem to be working.

• It is kicking the can down the road.  Scott Bessent has even said that we will grow our way out of it.  Baby boomers of still of sound mind will have to admit that they have been hearing that line almost all their lives, but we haven’t grown out way out of it yet.

• Many in Washington are just closing there eyes tight and stepping on the gas.  They’re hoping desperately that they can hang on a little longer, maybe even get through the next election, giving them and their cronies time to plunder the public purse a little more.

• Some are rearranging the deck chairs.  That is the activity of the most oblivious of Washington denizens, the clueless who don’t realize they are on the Titanic.  The socialists in steerage want to change places with the passengers in first class.  See the medium blue “Payments to individuals” in the graph below.  Their hopes are pinned on increasing that share of spending dramatically.  They don’t understand the $40 trillion in debt and rising interest rates as signs that there is nothing left to grant their wishes for free stuff.  

As for the informed, their eyes are open.  They are not blindly wishing for a miracle to restore American prosperity.  They know that no matter how much deodorant Washington sprays on itself, it is no substitute for monetary and fiscal hygiene.  The informed are moving to the lifeboats ahead of the collision with the debtberg.  They are acquiring gold and silver with both hands.