(International Man)—Contrary to conventional wisdom, higher interest rates mean more inflation in the environment today.
That’s because the federal interest expense increases as interest rates rise. As the federal interest expense rises, so does the budget deficit. As the budget deficit increases, so does the currency debasement needed to finance it. Skyrocketing interest expense will have an enormous impact on the US budget.
Even according to the US government’s rosy projections, the interest expense on the federal debt will exceed $1 trillion for the first time in 2024… and it shows no sign of slowing down. On the contrary, it’s growing exponentially.
First, it’s essential to understand the basics of the US federal budget. Let’s zoom out and look at the largest components of the US federal budget from the latest available data in the chart below.
The biggest expenditures for the US government are so-called entitlements. It’s not likely any politician will cut these. On the contrary, I expect them to continue to grow.
With the most precarious geopolitical situation since World War 2, so-called “National Defense” seems unlikely to be cut. Instead, military spending is all but certain to increase. Income Security is a catch-all category for different types of welfare. That’s unlikely to be cut too.
Unless it becomes politically acceptable to cut things like Social Security, military spending, and welfare, efforts to make a dent in expenditures won’t be meaningful. Further, interest expense (Net Interest above) is set to explode higher.
The US government projects that the federal interest expense will exceed $1 trillion in 2024 for the first time. That means the interest expense will exceed defense and everything else in the budget except for Social Security, which it will also likely exceed soon.
As the cost of debt service is taking up a larger portion of the budget, there is less for other expenditures. That means the government has to borrow increasingly larger amounts to maintain basic functions. However, it’s worse than issuing more debt to cover Social Security and the military.
The US government is now borrowing money to pay interest on the federal debt, which has a compounding effect as the federal debt and interest expense grow exponentially.
I suspect we are close to the inflection point where it gets out of control. 2024 could be the year that it becomes evident the US is trapped in a debt spiral.
Here’s the bottom line with the budget. The most significant expenditures have nowhere to go but up. But don’t count on increased revenue to offset these increases. Even if tax rates went to 100%, it would not be enough to stop the deficits—and the debt needed to finance them—from growing.
The US government is out of options. Therefore, the question is not whether it will default but how. When faced with a choice, politicians always choose the most expedient option. In this case, that means issuing more debt rather than making tough budget decisions or explicitly defaulting.
There is a big problem with that, though. As the amount of debt skyrockets, the interest rate rises to entice buyers and holders.
Allowing interest rates to rise high enough to entice natural buyers would bankrupt the US government because of the higher interest costs, which are set to become the largest item in the budget.
So, I would not expect the Fed to raise interest rates much more. In fact, they have already paused the rate hikes and are signaling a pivot to easing again, likely for this exact reason.
That means the Fed has effectively given up on bringing price inflation down even though the year-over-year change in the CPI remains above 4%, more than double the Fed’s target of 2%.
In other words, even with their own crooked statistics and rigged game, the Fed has failed even to come close to their inflation target. It’s a massive failure. Bloomberg is already hailing it “The Great Monetary Pivot of 2024.”
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It’s crucial to understand that by surrendering to inflation, the Fed is returning to the same policies that caused prices to rise in the first place.
So, if higher interest rates are off the table and cannot entice more natural buyers, who will finance these growing multi-trillion dollar budget deficits? The only entity capable is the Federal Reserve, which buys Treasuries with dollars it creates out of thin air.
That’s why I am convinced extreme currency debasement is the inevitable outcome.
All the rest is noise.
The US government’s only practical option is ever-increasing currency debasement… and it could devastate most people.
I suspect it will all go down soon… and it won’t be pretty.
It will result in an enormous wealth transfer from savers and regular people to the parasitic class—politicians, central bankers, and those connected to them.
Countless millions throughout history were wiped out financially—or worse—because they failed to see the correct Big Picture as their governments went bankrupt.
Don’t be one of them.
That’s exactly why I just released an urgent new report with all the details, including what you must do to prepare.
It’s called The Most Dangerous Economic Crisis in 100 Years… the Top 3 Strategies You Need Right Now.
Independent Journalism Is Dying
Ever since President Trump’s miraculous victory, we’ve heard an incessant drumbeat about how legacy media is dying. This is true. The people have awakened to the reality that they’re being lied to by the self-proclaimed “Arbiters of Truth” for the sake of political expediency, corporate self-protection, and globalist ambitions.
But even as independent journalism rises to fill the void left by legacy media, there is still a huge challenge. Those at the top of independent media like Joe Rogan, Dan Bongino, and Tucker Carlson are thriving and rightly so. They have earned their audience and the financial rewards that come from it. They’ve taken risks and worked hard to get to where they are.
For “the rest of us,” legacy media and their proxies are making it exceptionally difficult to survive, let alone thrive. They still have a stranglehold over the “fact checkers” who have a dramatic impact on readership and viewership. YouTube, Facebook, and Google still stifle us. The freer speech platforms like Rumble and 𝕏 can only reward so many of their popular content creators. For independent journalists on the outside looking in, our only recourse is to rely on affiliates and sponsors.
But even as it seems nearly impossible to make a living, there are blessings that should not be disregarded. By highlighting strong sponsors who share our America First worldview, we have been able to make lifelong connections and even a bit of revenue to help us along. This is why we enjoy symbiotic relationships with companies like MyPillow, Jase Medical, and Promised Grounds. We help them with our recommendations and they reward us with money when our audience buys from them.
The same can be said about our preparedness sponsor, Prepper All-Naturals. Their long-term storage beef has a 25-year shelf life and is made with one ingredient: All-American Beef.
Even our faith-driven precious metals sponsor helps us tremendously while also helping Americans protect their life’s savings. We are blessed to work with them.
Independent media is the future. In many ways, that future is already here. While the phrase, “the more the merrier,” does not apply to this business because there are still some bad actors in the independent media field, there are many great ones that do not get nearly enough attention. We hope to change that one content creator at a time.
Thank you and God Bless,
JD Rucker
