Dear Reader,
This is Dylan Jovine with Behind the Markets.
Happy Monday. Today is Monday, March 23rd — and we are committing national suicide.
The Treasury Department came out last week saying our national debt is expected to cross $40 trillion by October.
We have added a trillion dollars in new debt over just the past five months, and that's before you factor in a single dollar from the Iran war.
It's unbelievable.
And it has been accelerating since the Big Beautiful Bill passed with all the goodies packed inside it. The Congressional Budget Office now projects we will be spending $2 trillion on interest payments alone very soon.
Think about that.
At the pace this is accelerating, it's not beyond belief that we could be adding $3 trillion a year in new debt. To put that in context — Trump's first term added $7.4 trillion in debt, Biden's term added $7.2 trillion. Trump's second term could add somewhere between $10 and $12 trillion. We are not only robbing our children of a future, we are putting them up for debt slavery. They will basically be working to pay back whoever we owe this money to.
A subscriber of ours asked me the other day if I still thought gold was strong, given how volatile it's been with the Iran war. I told him — in the long term, absolutely. Ray Dalio has said 10% to 20% of your assets should be in gold, and I agree with that. Short term it's going to be volatile. But there is still a great way to play it.
And frankly, it's not just buying gold itself. The real opportunity — the one that could actually change your financial life — is owning the companies that have the gold still in the ground. When gold prices soar, those stocks don't just go up. They go parabolic. We've seen it happen in 1968, in 1980, in 2020. Every single time.
I've been doing a lot of research on exactly this, and I put together a full breakdown of what I think is the single best-positioned company for what's coming. If you want to understand why this may be the greatest gold play in the market right now, make sure you check out this report asap.
But the bigger concern I have when debt gets this bad is what history tells us about what comes next.
Here's what most people don't understand. The big institutional investors — the ones who normally buy our longer-term treasuries — have essentially stopped. They're saying, I'm not going to lock in 3.5% or 4% for 30 years when you're borrowing this aggressively. They'll lend the government money for the short term — a year, two years, three years — but not long term. And I'm one of them. I buy T-bills that mature in under a year. I'm not lending the government money for decades when they're printing at this pace, because the fixed coupon I'm earning will be worth less and less as they keep adding to the debt.
So what's happening is the Treasury is being forced to issue short-term debt because that's all the market will absorb. It's like credit card debt on a national scale. And then on top of that, the older debt issued two or three years ago has to be rolled over at the same time. So you're adding $2 to $2.5 trillion in new debt per year while also rolling over another trillion or more in old debt. You end up managing something like $10 or $11 trillion in debt at once — a debt snowball that just keeps growing.
And since there isn't enough institutional demand for that level of debt, the Federal Reserve ends up buying it.
The Treasury sells it, the Fed buys it. Left hand, right hand.
People love to complain that the Fed's balance sheet has gotten too big — well, who else is going to buy the debt? If the Fed steps back and lets the market set interest rates naturally, rates go up. Simple as that.
I've been warning about this for years, and I know it's easy to dismiss that kind of thing. Nobody wants to be Chicken Little running around screaming the sky is falling. But I am telling you right now — there is nothing written in stone that says we get to stay a superpower. That status is based entirely on our ability to manage our finances, and right now we are failing at that in a bipartisan way.
There is plenty of blame to go around on both sides. Not one person running this country over the past 15 years is innocent.
We need an adult in the room when it comes to fiscal discipline. And our kids and grandkids are the ones who will pay the price if we don't find one.
Anyway, that's all I have today. Have a wonderful day. I'll see you tomorrow.
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