Thread by @CMediumErik

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

-Henry Ford

Henery was a #Bitcoiner 100 years before it was invented.

Why?

Because Banks and Governments are businesses thier operations financially mimic a typical company.

Unllike typical companies, if they were rated like typical companies, they'd all be rated CCC+.

This rating means on the verge of default or bankruptcy.

It's one thing to sit on your Government and Banking "prestigious Institutional" high horse and judge other companies.

Its another thing all together when you're in far worse shape than the worst companies you're taked with judging

This is a sad yet amusing reality

Just like business, there must be revenue to cover all expenses for it to keep operating

~95% of gov't revenues typically come from taxes: individual and corporate income, payroll, and excise taxes

~5% typically comes from estate taxes, customs, penalties, and other fees.

In the business of running countries, taxes should cover ALL gov't expenses

But opf course, they do not.

They all spend far more than they make.

The US, which is the best horse at the glue factory, is perpetually operating in a deficit.

Enter the debt spiral:

Fed Rate hikes = Stronger US Dollar = increase in bankruptcy and unemployment = increased credit default = Global Banking/Credit collapse = Global sell-off of us debt = US is sole buyer = US exports crash = Fed Pivot = US Dollar Currency Collapse = Reset?

What does that mean?

As Interest rates go higher, the deficit gets bigger, interest expenses increase, more debt (bonds) is issued, and Interest rates go higher......c

ycle repeats until "No Bid"

"No bid" on Government bonds = No liquidity for Governments to pay their bills

This cycle with continue until as US Dollar Calloapse/Default or Pivot scenario

"Given the reality that the world finds itself in today, the only option is debt monetization every time GDP falls, or assets fall by any significant amount.

This is the debt trap."- R. Pal

What happens to a normal company that issues too much debt and winds up unable to pay the interest on it?

If it cannot fix its budget problem, it eventually goes bankrupt...

But governemnts and banks get another option;

Government Helicopter money via the magical central bank credit card tree.

As they create and open yet another credit card to cover the raised expenses they trap themselves.

It’s also how they perpetually operate in a deficit

more debt → higher interest rates → higher deficits → more debt

As this worsens, investors lose confidence in the country and demand higher rates for the country’s bonds,

This only makes the debt situation worse

This is the debt spiral.

As I said earlier, the US is the best horse at the glue factory,

Lets look at the problems it has using grade 10 math;

The US reports 4.8T in annual tax (extortion) revenue.

$4.8T taxes - $3.7T entitlements - $800B defense = $300B budgeted for interest expense

The US currently owes 1.2 ish T

So 300B - 1.2T = -900B....🧐🤔

With interest expenses 900B more than what exists this = Certain Bankruptcy (for regular companies)

On top of this, you add recession based job losses, business bankruptcies and money exiting the economy.

This means far less tax revenue fo the Government- oh oh - we can't have that..

This is when the Fed avoids the problem,

they pivot by lowering rates and resuming quantitative easing (printing)

Inflation resumes,

Then the Fed raises rates again to tame it, and US borrows at higher rates to cover the deficit

Blah blah blah...

The Cycle continues

In closing;

Whether its 5, 10 or 50 years - ALL fiat currencies collapse under the weight of their own debt.

Im not an adviser or fro m the US but here is my plan

For every $10 US to invest;

$2 USDC stablecoin liquid in sefl custody
$5 Gold and silver
$3 #Bitcoin

References;

Greg Foss
Jeff Booth
Raoul Pal
Lyn Alden
James Lavish
Lawrence Lepard
Robert Breeedlove

Thank you