It is obvious that something is wrong with the US. economy. No matter how much the politicians twist the whole situation, this amount of debt can’t be payed. According to NYT [1] : “America’s debt is now six times what it was at the start of the 21st century. It is the largest it has been, compared with the size of the U.S. economy, since World War II, and it’s projected to grow an average of about $1.3 trillion a year for the next decade.”

Those numbers are so big that a regular person can’t even imagine them. It seems that these numbers, bigger and bigger with each year, are rising without any consequences. As long as the US can sell its bonds and as long as there are buyers, we can pretend that everything is working, but at some point we will reach the sealing.

In fact I think that we are reaching it right now. The war in Ukraine has accelerated a process that might be irreversible. Dedollarisation is in full swing. More and more countries are dumping USD and using their own currencies to trade. The all-mighty $, the only currency on your laptops keyboard is not that sexy anymore. For sure it still is very powerful but countries like India [2], Kazakhstan [3], Pakistan [4], Saudi Arabia [5] and many more (you can Google them easily - a good starting point is here https://en.wikipedia.org/wiki/Dedollarisation) are trying to go around the system. This means that the need for USD is shrinking but the debt is rising. Who will buy all of these bonds? Of course the process of dedollarisation won’t happen overnight - this is just the beginning. It might take years or even decades to finalize the change.

The US debt also has to be paid. A default on the debt would mean an end to the US hegemony. Great Britain payed its final payment for the WWII debt in 2006 [6]. Think about it. No cent is ever forgotten. No matter what happens. A debt is a debt and someone owns it.

The only viable solution to cancel that enormous and constantly growing unpayable pile of debt is to kick the table in the casino. Will the US kick the table?

Rough times ahead of us…

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Sources:

https://www.nytimes.com/2023/01/22/business/economy/federal-debt-history.html
https://timesofindia.indiatimes.com/business/india-business/explained-how-the-indian-rupee-is-going-global-and-drawing-interest-from-more-nations/articleshow/96332970.cms
https://www.rferl.org/a/31760079.html
https://www.aa.com.tr/en/energy/invesments/pakistan-china-agree-to-trade-in-yuan/22190
https://www.bloomberg.com/news/articles/2023-01-17/saudi-arabia-open-to-talks-on-trade-in-currencies-besides-dollar
https://www.nytimes.com/2006/12/28/business/worldbusiness/28iht-nazi.4042453.html

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