Big events are coming; Trump really wants to lead the U.S. into a death spiral. He actually wants to remove the debt ceiling on U.S. Treasuries. With his approach, the U.S. debt explosion is just a matter of time.
What does it mean to remove the debt ceiling on U.S. Treasuries?
This is just like our credit cards; don’t they all have a limit? Trump wants to eliminate this limit and gain unlimited credit card power.
In 2017, before Trump first became president, the credit card limit was 14 trillion; now it is 36.8 trillion, an increase of 2.6 times. But Trump still thinks it’s far from enough because what he wants to do is just too expensive.
Social security and healthcare will involve huge subsidies, all in the trillions, plus there will be a 3.75 trillion tax cut, and military spending will increase, all of which are in the trillions. His current mindset is that he only has a four-year term; he must spend money recklessly and make an impact to win people’s hearts and showcase his ability. He must enjoy himself first; whatever happens after he leaves office, even if there’s a flood, he won’t care. This is similar to many of our county leaders; with a revenue of only 2 billion in a year, they dare to borrow 40 billion for cultural tourism projects, just for short-term performance. As for repaying, that’s someone else’s problem; they don’t care.
But where will the money come from?
The U.S. now has an annual income of 4.9 trillion and annual spending of 6.8 trillion, resulting in a fiscal deficit of 1.8 trillion, along with 36 trillion in debt. Just paying interest requires 20% of income, with a debt ratio of 123%, far exceeding the 60% warning line.
Why does Musk have such a big opinion on Trump? It's because his government worked tirelessly to help Trump cut spending by 160 billion, and then turned around and Trump increased spending by more than 4 trillion. Musk must feel cheated.
So the current income and expenditure situation in the U.S. can be summed up as borrowing to pay off old debts.
But we all know that living life is about knowing that swiping a card is momentarily satisfying, but repaying it feels like a funeral. The biggest problem in America right now is that its debt is increasing too quickly, with the rate of debt increase being three times that of income. In other words, the amount borrowed is getting larger, but the ability to repay is getting worse.
Now, the creditors are scared and are all selling U.S. Treasuries. At our peak, we had 1.3 trillion in U.S. debt, and now it's over 700 billion and still selling. In the future, it may just keep 300 billion. Even Japan, which has always been optimistic about U.S. Treasuries, is continuously selling. The U.S. dollar index is plummeting, and the interest rates on 10-year and 30-year U.S. Treasuries have surpassed 5%. This all indicates that no one is optimistic anymore; everyone is afraid the U.S. debt will explode and affect them.
So when will the explosion happen? Ray Dalio from Bridgewater has calculated that by 2035, U.S. debt will reach 50 trillion, with 2 trillion in interest per year, exceeding 30% of total income. At that point, this model will basically collapse.
In the past, there was a limit on U.S. debt that imposed some restrictions on presidential spending. Trump wants to break this limit. If he succeeds, the time for the U.S. debt collapse will be greatly accelerated.
So the next ten years will be a decade of currency wars, de-dollarization, and moving away from SWIFT, with the renminbi, euro, and even stablecoins competing for dollar market share.
So what will America do? At that time, 90% of the U.S. debt may be in the hands of American companies and individuals. The U.S. will either fleece its own people to reduce debt or export the financial crisis or even go to war to solve the debt problem. Regardless, major turmoil is inevitable.
