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Example Of Inflation Gone Mad

The U.S. economy is the largest in the world.

The gross domestic product (GDP) – the total of all the goods and services the country produces each year – tops out at $25.4 trillion. The next biggest GDP is China’s with $17.9 trillion. And third is Japan’s at $4.2 trillion.

These numbers – millions, billions, trillions – they roll off the tongue. But exactly how much money are we talking about here?

There’s no better way to understand the sheer volume of money than to show you…

You might have a $1 bill lying around. If so, grab it, put it on the table. It weighs about a gram and is no more than 0.11 millimeters thick.

Stack 1,000 of them on top of each other and you’d have a fat stack about 4.3 inches high – roughly the height of a toilet roll.

Stack a million of them on top of each other and it would stretch the length of a football field (100 yards).

Now, stack a billion of them on top of each other and congratulations – you’re well across the threshold that delineates Earth’s atmosphere from outer space. (Space officially starts at 100 kilometers, also known as the Kármán line.)

Here’s where things start to get almost beyond the realms of comprehension…

One trillion one-dollar bills stacked on top of each other gets you about a third of the way to the moon.

But try 33 trillion of them – stacked one, after the other, after the other. That gets you right up to the moon and back almost five times over.

That’s further than all the human space flights Elon Musk has launched with SpaceX.

Elon wants to go to Mars, which should be no problem. He could just make a bridge out of pennies. Thirty-three trillion dollars in pennies would reach Mars 13 times over.

These numbers – these examples to the moon and to Mars – are frankly absurd.

They’re absurd because that kind of money – $33 trillion – is an absurd figure. It’s a volume of money that doesn’t (and never will) physically exist.

But it’s exactly the level of federal debt in the United States today.

Thirty-three trillion dollars is not “just a number.” It’s easily said and dismissed mainly because of the absurdity of such a figure.

But $33 trillion is the financial burden that you, your kids, your grandkids, and your kids’ grandkids will have to shoulder.

Here’s where it gets worse…

The current interest rate on the benchmark 10-year Treasury note is 4.9%.

JPMorgan CEO Jamie Dimon forecasts rates will rise to 7%. JPMorgan is the largest bank in the United States, so Dimon knows a thing or two about these rates.

At 7%, the interest payments on $33 trillion would be in the vicinity of $2.3 trillion per year.

This level of debt is the end game I’ve been warning you about… a “doom loop” that tips America over the edge from dollar superpower into dollar collapse.

It’s this level of debt – and the trillions more needed to service it every single year – that triggers de-dollarization.

De-dollarization is the world reducing its reliance on the U.S. dollar as a reserve currency. And it would signal the decline of America’s position as a global financial superpower.

And the trend has already started…

Earlier this year at the World Economic Forum in Davos, Switzerland, Saudi Arabian Finance Minister Mohammed Al-Jadaan said his country would be open to other currencies aside from the U.S. dollar to improve trade.

This was no off-the-cuff comment. It was a follow on from Chinese President Xi Jinping, who said in December 2022 that oil trade should be priced in Chinese Yuan.

Brazil President Luiz Inacio Lula da Silva called for the BRICS nations (Brazil, Russia India, China, and South Africa) to create their own common currency at the BRICS Summit in Johannesburg just this August.

He said a common currency, “increases our payment options and reduces our vulnerabilities.” In other words, it reduces their exposure to the U.S. dollar.

This is the reason the Federal Reserve is about to face the music when it goes to market in just a few weeks to sell bonds to a world that’s starting to look for alternatives to the U.S. dollar.

To fund the government’s ongoing operations and the trillions in debt it continues to stack up, the U.S. Treasury will auction off a whole host of Treasury bonds and bills to the market later this month.

It does this just to pay the bills.

Seems like a good plan: Stack up debt, sell debt to pay for your debt… except the gigantic elephant in the room – what if there’s no one there to buy at the auction?

They need to sell hundreds of billions in their Treasury auction to fund their lavish lifestyle. But if they can’t… all hell could break loose.

The inability to sell bonds to service the absurd debt spiral means that Fed boss Jerome Powell and his minions at the central bank will have no other choice but to wind up that money printer again and dramatically increase money supply.

But what does that look like in real life? Consider this…

In 2020, a McDonald’s Big Mac cost about $4.95. As of July 2023, a Big Mac costs $5.58. That’s a 12.72% rise in just three years.

That’s what real world inflation looks like.

Or something more substantial, perhaps…

In 2020, a top-of-the-line Range Rover Sport – the most expensive and most desired model – cost $114,500.

This probably wouldn’t bother you if you made a killing in the 2017–18 crypto bull cycle.

But if you came to crypto late, you’re going to pay the price when you go Range Rover shopping after the next bull cycle.

The price of a 2024 Range Rover Sport (P635 SV) – the top-of-the-line Range Rover Sport on sale in the U.S. today – is $180,300.

That’s a $65,800 difference – a 57% increase in just three years.

This is what real-world inflation looks like.

It erodes your purchasing power. And the only way to beat it is to either find some way to make a lot more income, or you have to go hunting for returns elsewhere.

The Fed, via its money printing – which in turn fuels inflation – forces people into a corner.

Earn more or get poorer. It’s that simple.

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