I don't think many people grasp the gravity of the chart above. One aspect of the interest rate hikes that the Federal Reserve has instituted throughout the year that few people are talking about is the effect the hikes are having on the interest payments on all of the debt the US has racked up over the course of many decades. As it stands today, the amount of interest the US is paying on its debt is one of the largest line items for the Federal government and could become the largest line item if things continue unabated on the path they are on.

What's worse, there are only two possible solutions to the problem of runaway debt; overtly default on it or inflate it away. Due to the fact that an overt default on the debt is politically infeasible because we live in a world in which US Treasuries are assets that are held in size by many of the world's governments and a rug pull of that size would likely lead to war, we are really left with the option of printing the debt away.

At some point things are going to begin to break in credit markets due to a liquidity crunch and the Fed is going to be faced with the decision to let everything fail at once via default or begin lowering rates again in conjunction with dusting off the money printers. You can bet your ass that the decision will be to turn those money printers back on. And since the interest on the debt has already reached particularly high levels the amount of printing that will be necessary will make the COVID stimulus era look like child's play.

This scenario becomes more obvious when one considers just how broken global supply chains are - particularly for energy, computer chips and raw materials. When people can't heat their homes affordably or run their businesses because electirity bills are making it uneconomic to operate the solution provided by the central banks and the governments of the world will be to print and throw money at the problem, which will likely only make the problem much worse.

Be aware, freaks.

Clip of the day...

Matthew Mežinskis explains the bitcoin price power trend. Subscribe to the TFTC Clips channel to get high-signal-bite-sized pieces of content.

Final thought...

Journaling again. I should have never stopped.