Journey to Hyperinflation: The Uncertain Economic Future of the United States

The economic stability of the United States may be on the brink, as we face a series of potential triggers that could lead to a dramatic and unstable future. Understanding these risks and how they may play out is crucial for preparing for uncertain times ahead.

Two Bombs with Lit Fuses: Risk Factors for Economic Collapse

Imagine a bomb with a lit fuse. The United States has two such bombs that, if ignited, could lead to a collapse in the U.S. economy, culminating in hyperinflation and widespread devastation. These are the petrodollar and the massive federal debt.

The Petrodollar: A Potential Trigger for Economic Collapse

The first of these two bombs is the petrodollar. This is the US dollar as the global reserve currency, backed by the world's commodities markets. However, if the BRICS alliance simultaneously rejects the dollar, the foundations of this global reserve currency will crumble. The BRICS nations control 48% of the world's oil production and are expanding their control of global commodities markets in 2024. Consequently, should they decide to reject the dollar, the dollar will lose its backing, leading to its collapse.

In response to this collapse, the Federal Reserve will attempt to stave off the inevitable by flooding the markets with newly printed dollars. This strategy, however, will result in hyperinflation in the United States, as the newly printed money becomes worthless. This scenario is most likely to unfold between 2025 and 2026. Even if the BRICS nations do not trigger this collapse, the economy is still at risk of entering a hyperinflationary period by the early 2030s.

The Federal Debt: A Growing Threat to Economic Stability

The second bomb is the enormous federal debt, which is expanding at an alarming rate of about 1 trillion dollars every 100 days. The interest on this debt has surpassed the spending on defense, highlighting the unsustainable nature of the current financial situation.

The federal debt is no longer being funded by foreigners buying treasury bonds; instead, the Federal Reserve is monetizing the debt by purchasing the bonds. This monetization process will force the Federal Reserve to lower interest rates, thereby leading to more inflation as they print more dollars to meet the growing demand for funding.

To avert this second threat, the U.S. government would need to cut spending and reduce the debt. However, it appears incapable of implementing such measures. As a result, the smart money is betting on a default, which would further exacerbate the situation and lead to hyperinflation. If the BRICS alliance does not destabilize the U.S. economy, it is likely to enter a hyperinflationary phase by the early 2030s.

Interest Rates and the Risk of Hyperinflation

The Federal Reserve’s recent actions in raising interest rates to 19% in the late 1970s resulted in one of the worst recessions in U.S. history. This historical precedent underscores the significance of interest rate policy in preventing hyperinflation.

Given the current unstable economic environment, the Federal Reserve must carefully navigate interest rate hikes to avoid triggering hyperinflation. The decision to raise rates too aggressively could push the economy over the edge, while not raising them enough risks the unchecked growth of the federal debt leading to a catastrophic economic collapse.

In conclusion, the journey to hyperinflation for the United States may be inevitable if the two major risk factors—bridling the petrodollar and addressing the federal debt—are not managed prudently. Preparing for such a scenario requires a comprehensive understanding of the economic risks and a robust strategy to mitigate them.