reSee.it - Tweets Saved By @porterstansb

Posted - May 30, 2025 at 4:36 AM

Saved - May 30, 2025 at 7:02 PM

reSee.it AI Summary

I find Lyn Alden's insights crucial, especially her assertion that "nothing stops this train" regarding U.S. fiscal policy. She highlights the unsustainable nature of our debt, rising interest expenses, and the dwindling trust funds, all underscoring a new era where government spending will continue unabated. This isn't just fear-mongering; it's a realistic assessment of our financial system's limits. I highly recommend watching her analysis, as it emphasizes the importance of Bitcoin as a counter to our current trajectory. Also, I encourage subscribing to my newsletter for deeper market insights.

@porterstansb - Porter Stansberry

Extremely important. Where @LynAldenContact says "nothing stops this train," I say "repeat after me: The spending will never stop." While she doesn't get into automatic COLA increases, the facts she lays out are the most important ones. Watch until the end. The highlight is her explaining how paper money is an adjustable ledger. And we all know how they will continue to adjust it. If you watch anything carefully this weekend -- this is it.

@UnderCoercion - Lysander

Lyn Alden gave one of the clearest breakdowns of why the U.S. is on an unstoppable fiscal path—and why Bitcoin matters more than ever because of it. @LynAldenContact walks through the numbers behind the federal deficit, interest expenses, Social Security, and the structural changes that happened post-2008. The short version? We’re in a new era. One where the government can’t slow down even if it wanted to. The debt is compounding. The interest expense is rising. The trust funds are running dry. And the political will to do anything about it doesn’t exist. Her phrase: “Nothing stops this train.” Not because of ideology, but because of math—and human nature. This isn’t hyperinflation doom-talk. It’s a sober look at what happens when a system built on ever-growing debt reaches its limits—and why Bitcoin, with its fixed supply and transparent rules, is the opposite of that system. Highly recommend watching this one all the way through.

Video Transcript AI Summary

The US fiscal deficit is decoupling from unemployment, entering a new era where deficits remain high despite low unemployment. This matters because it impacts asset prices, especially scarce ones like gold and Bitcoin. Historically, gold prices correlated with real interest rates, but this relationship decoupled around 2022. Federal debt growth now consistently outpaces private sector debt growth, impairing the Fed's ability to control credit growth through interest rates. This fiscal train is unstoppable due to several factors. High debt levels combined with interest rates that can't go much lower are making interest expenses a meaningful part of the federal budget. The Social Security trust fund is projected to deplete, leading to increased spending. The fiat system relies on continuous debt growth, making deleveraging difficult. The system is like a Ponzi scheme that requires constant expansion. The US is repeating a pattern seen in the 1940s, switching to federal debt growth and large deficits. This is inflationary and persistent because raising interest rates exacerbates the deficit. This relentless deficit growth contrasts sharply with Bitcoin's scarcity and transparency, making it a valuable asset to own.

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Full Transcript

Speaker 0: Joe, his colleagues are telling him we really have to slow down. We're we're getting over our skis here. And he says no. Nothing stops this train. And I've been using that term to describe what's going on with US fiscal deficits. And I'll go into during this pretty concise presentation what that means, why it matters, and why it's so unstoppable. Because of course, we're here at a Bitcoin conference, but there is this much larger dollar system that's happening around us and all over the place. And so the inter exchange between what's going on in Bitcoin or what's going on in dollar land really matters for things like the exchange rate, things for the economy, investing in general. And so, we'll start now, we'll go into these pretty concise slides. Some of them will be simple slides, some of them will be a little bit more complex, but I'll walk you through the parts that really matter. So, this chart here shows two lines. One is the unemployment rate and one is federal deficits as a percentage of GDP. And this goes back many decades and as you can see from the slides, there's always been very good correlation between them. During recessions, unemployment goes up, the federal deficits go up, and during better times, unemployment is low and federal deficits are low. The one brief exception, if you can go in and see it on the chart, is 1960s. That's when we had the Vietnam War. So there's a little bit of an exception, but other than that, these are almost the same line. But what you'll see on the right hand side of the chart, and I circled it in green, is over the past several years, ever since around 2017, we've had a decoupling. We've had shrinking unemployment, we've had low unemployment levels, and yet the deficit has blown out to six or 7%. Even before and after the pandemic, this was already happening. Obviously, it went into overdrive during the pandemic, but we're in this new world now. I'm not the first person to talk about the deficits, but I am trying to bring attention to what's going on now that was not going on for many decades. We're entering a new era. So that's what the deficit is. But the second main question is why does it matter? Why are we talking about it here at a Bitcoin conference? And the short reason is because it matters for asset prices, especially anything scarce. So this chart shows in the gold line is the price of gold and black line is real interest rates. And again, we've historically seen that there's been a very strong correlation between these two things. And so for those that don't know what I mean by real interest rates, this one is specifically the ten year Treasury yield minus CPI inflation. And the reason these two charts, gold and real Treasury rates are so worth comparing is because they're the two primary reserve assets globally. They're the ones that compete with each other at that scale. And gold of course is pretty scarce. The supply grows by an estimated one to 2% per year, you don't get paid any yield to own it, if anything you incur an expense for storing it, whereas Treasury yields, dollars and Treasuries, they grow at a much faster supply growth, but then you get paid this yield to own them. And during periods where the yield is rather high compared to measured levels of inflation, some of the investors that might otherwise buy gold get enticed to come back to the dollar and the treasury system. But then during periods of time where the yields are not high enough compared to inflation, many investors flock to gold. They basically say if I'm not going get paid anything on my Treasuries, why would I own Treasuries that are way more abundant than gold? And historically, has been a very strong correlation. High real rates means higher gold price. And on this chart, the real rate is inverted. So lower means higher real rates. And again, as you've seen over the past several years, this one in particular starting around 2022, we've had a complete decoupling in the price of gold in real rates. There's something new is happening here in this kind of fiscally dominant environment. And of course, this is relevant for Bitcoin. A lot of people, if you would have said five years ago, if interest rates are four or 5%, would Bitcoin be selling out massive conferences in Las Vegas and would it be worth over $100,000 per coin? Most people would say no. In fact, many critics kept saying that it's just a zero rate phenomenon. It's some bubble that's going to go away as soon as Fed gets any sort of hawkish income. But what we've seen over the past several years is the Fed got about as hawkish as they could get. They even broke some banks in the process and yet gold and Bitcoin both soared anyway because something changed. So, charts are a little bit noisier but I'll direct you to the parts that matter because this is the inflection point that really shows up. So, the blue line on these charts is private sector year over year debt growth. So, that's bank loans and that's corporate bonds, that type of thing. The red line is federal growth. So, you have private markets and public markets. The pain on the left is nineteen fifty five to nineteen ninety the pain on the right is 1990 to the present. So this is a seventy year history. And if you look at the left side, for the most part, the blue line, private sector debt growth was going up at a faster rate in any given year than public sector debt growth. And there are rather few exceptions that occur around recessions and I marked those in yellow on the charts. And those are pretty far between. During recessions, the deficits would go up, bank lending would go down, and we moved past that. What you see on the chart on the right is that ever since the two thousand and eight global financial crisis, and especially ever since in recent years, we've been in this period of time where federal debt growth is consistently going up at a faster rate than private sector debt growth. And I highlighted again in those little green boxes, if you can see them on the right, that even outside of recessions, this is still the case. So this was happening before the pandemic and after the dust settled after all the money printing, it's still happening now. And the reason this turning point really matters is because when we look at what the Fed, what their tool is to control growth, it's mainly interest rates. If they want to slow down the economy, slow down credit growth, and try to slow down inflation, they jack up interest rates to try to make borrowing less attractive. On the other hand, if they want to accelerate things, they then lower interest rates. The problem is that, you know, decades ago when federal debt was low and most of the money creation was coming from private sector, whenever they raised interest rates, they would slow credit growth. They would slow the private sector faster than they would blow out physical deficits. The problem now is they have over a % of GDP, which only happened in recent years. When they raise interest rates, they ironically increase the federal deficit at a faster pace than they slow down private sector credit growth. Basically, what that means is they don't have brakes anymore. The train nothing stops this train because there's no brakes attached to it anymore. Or another way of putting it is the brakes are heavily impaired. We've kind of gone through the looking glass, we're in Wonderland now where the rules that work for the majority of this timeframe now work backwards. They don't really have a way to slow down total credit growth in the system, and that's a new phenomenon. So, for the remainder of this talk, I'll just go over a few slides of why this is so unstoppable. Why can't just a couple people get together and figure this out? Why is this so entrenched? Why is it that I'm confident to say that nothing stops this fiscal train even regardless of election outcomes? I was saying it before the election. I was saying it after the election because it doesn't really matter. Nothing stops it. And so on this chart, we have, it's a pretty simple chart. The blue line is ten year interest rates, ten year treasury interest rates, and the red line we have debt to GDP, federal debt to GDP. And in the 1980s, you had very low debt levels and you had very high interest rates, and we've gone on this like five year decade journey of ever higher debt levels, but it's been offset by this structurally declining interest rate. And what that means, like for example, you double your debt but you cut your interest rates in half, your interest expense is still manageable. So, for this whole forty plus year period, interest expense was actually pretty manageable. But what happened is eventually we hit zero, just mass kind of reassert itself. And so now we're in an environment where the first time in decades interest rates are not going structurally down anymore and debt levels are still very, very high. They're the highest that they've ever been since the nineteen forties. And so interest expense is actually becoming meaningful part of the federal expense for the first time ever, and there's no easy way to get that under control. If they cut into trade super low, then everybody wants to get into scarce assets, but if they keep interest rates high, they keep blowing out the federal deficit because we're kind of in wonderland now. So, that's a really big component. Another really big component is social security. So, this chart shows the social security trust fund, and as you can see it went from zero and it rose to about $3,000,000,000,000 on that chart. And the reason for this kind of change that's happened over time is because of demographics. So the baby boomer generation was an unusually large generation born from the late 1940s into 1960s after World War II. A very large generation, and when the workforce, they were paying in security, so we had this big ramp up in the amount of funds that were invested. Now, unfortunately, they didn't invest Social Security very well. They held it in US Treasury bonds basically, which are not the best long term investment you can make. And according to the Social Security Administration's own numbers, by about 02/1935 they're going to deplete that trust. And what that means in practice is that they're going to spend down this $3,000,000,000,000 into the economy. That's as the baby boomer generation enters their retirement years, which they're already doing and they're going continue to do, this is going to continue to roll over. And if you notice, this kind of late twenty ten's, so 2017, '20 '18, it was kind of hitting its and kind of its process of rolling over and that's when deficits decoupled from unemployment and that's when the federal debt growth started to exceed private sector credit growth. A lot of this timing happened because at around the same time, interest rates stopped going down and the baby boomer generation that funded all this on the upside is now in drawdown mode. So, this is getting spent into the economy via healthcare, via travel, via housing, basically everything that people have to spend money on. And so, is a background expenditure that's going to go back into the system over the course of the next ten years. Now, sometimes that exact depletion date will get pushed forward or pushed back by one year, but this is mostly actuarial math. It's kind of inevitable. And if people vote, young people protest but then they forget to vote, this demographic actually votes and right now anything that touches the expenditure of this fund is the third rail of politics. Both major parties in The US have vowed basically not to touch the Security over this timeframe. And so, this is pretty much set in stone, even in a very politicalized environment. It's one of the few things the parties basically agree on. One of my last slides is to emphasize the ponzi nature of the system. So, even aside from current issues, demographics, and debt levels, basically the way the system is constructed, by the system I mean central banking with fractional reserve banking built on top of it, the whole fiat system we've been kind of operating under for century, It relies on growth. It's like a shark that can't stop swimming otherwise it drowns ironically. It's a system that has to keep increasing. And so, this chart, the top line is total debt the system. So, that's public debt and private debt combined, and it's actually over $100,000,000,000,000 for the first time. And the bottom line is the monetary base. And what we see is that for the entire period of this chart, so this goes I believe from 1966 until 2025, the entire period of this chart, total debt never went down except for one very brief exception and that was 02/2008. And it went down by about 1%, total debt in the system. And what they did was they rapidly increased the monetary base from 1,000,000,000,000 to right now about $6,000,000,000,000 It was so like impossible for them to let tiny amount of deleveraging occur that they kept the party going. And specifically back in that time, so if we do the math a little bit, in 02/2008, the total debt in the system was in the ballpark of $50,000,000,000,000. So, it's about half as big as it is now and they were on a monetary base of about a trillion dollars. So, the system is levered 50 to one. That's the type of leverage you see in like crypto degen derivatives contracts. It was like the to one leverage across the economy, and specifically they hit zero interest rates. So, they couldn't keep propping up the private sector debt bubble, instead they rotated to the federal level. And so, kind of shows how the system is. As you've gone forward, we're now more in the debt growth. I actually looked at the data that goes back even longer than this chart, going back about one hundred and ten years, And there were only four other years where the total debt level ever went down nominally. And that was during the great depression. So, 1930 through 1934 was the only other period beside 02/2008 on the chart where it went down. So, five years out of over one hundred and ten years of data is their tolerance level for ever letting that Ponzi. And that's just kind of the system that maybe we find ourselves operating in, and that's the big contrast that we have to Bitcoin. So, my last slide, we don't have to focus on the tier, but just by looking at the shape of these charts, these are century long charts. And so, main point with these charts is we've actually seen this story before. We've gone through something like what we're going through now in The US One time in the past, and that was around the 1940s. So, the reason that debt growth is so smooth historically is because when they do finally run into something that actually challenges it, they rotate the whole system around, and we're going through it for the second time. So, you have a private debt bubble build up and then you hit zero interest rates, so you can't keep adding more and more on to the accelerating debt growth. And then what happens is you find yourself levered 50 to one and you start to unravel. And how do you unravel a system that's levered 50 to one? The short answer is you don't. You just print more base units is how we handle it. So, that happens, they switch over to federal debt growth and they switch over to running massive federal deficits, so that even as private sector debt levels eventually kind of mellow out for a period of time, growing on the public side, and that tends to be more inflationary and that tends to be more persistent Because as we get to the point that I mentioned before, when the Fed raises interest rates to try to slow any of this down, they blow out the federal deficit at a faster rate than they slow down bank growth. So, basically, we're completely off the tracks now. I noticed nothing I said is anything about Weimar, nothing is about hyperinflation. It's all about basically long term unceasing 7% deficit growth. We're not talking about 70% deficit to GDP, we're talking about 7%, but it's every single year like clockwork. It's the relentlessness of it that matters. And so, we go forward, this is the system that Bitcoin's going to. And if you kind of summarize this whole talk, all these points, there's reasons why nothing stops this train. One is math. The way that they've constructed the Ponzi system that I've talked about before, the way that it has to always continue growing to ever not start deleveraging in the crazy way that it would. So, that's the system that they've built. And two, the second reason is human nature. None of us want to pay higher taxes. People that are on the receiving side of deficits never want to cut them. Virtually no politician is ever incentivized enough to actually cut deficits during their term. And basically, this represents a flexible ledger. This is the ledger that we all work with in The US and globally. It's a flexible ledger, they can always create more units. And therefore, that's the error correction that they keep falling back on over and over again. And that's what contrasts with Bitcoin. Bitcoin is, you know, the complete opposite of this system and it's the mirror of the system. Instead of ever increasing units, and indeed ever increasing units that can't even slow down, there's absolute scarcity. And instead of opaqueness, it's transparent. And instead of the error correction being able to just print more units, the error correction that happens in Bitcoin is deleveraging can happen, but you can never go after the unit itself. So, basically, nothing stops this train. For the next ten years, we're going to be running very large fiscal deficits in The US, almost regardless of what else happens. There are certain things that can accelerate it a lot. There are certain things that can maybe decelerate it a little bit. Nothing meaningfully. And so, the one way to protect yourself from that situation is to own the highest quality scarce assets, and of course the one we all like here is Bitcoin.

@porterstansb - Porter Stansberry

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@porterstansb — Porter Stansberry

Posted - October 14, 2023 at 4:57 AM

Saved - October 15, 2023 at 7:07 AM

reSee.it AI Summary

America's reckless spending and abandonment of financial constraints have led to a mounting debt crisis. The pandemic further fueled the problem, with the government printing excessive money and manipulating bond rates. Bank of America's massive investment in long-term bonds has left it vulnerable to insolvency. U.S. banks collectively face unrealized losses of $550 billion. Deposit flight from banks has reached unprecedented levels. The federal debt has skyrocketed to $33 trillion, with no end in sight. However, there is hope as short-term Treasuries now offer real yields, providing a defensive option for investors.

@porterstansb - Porter Stansberry

The reckoning begins on Tuesday. For decades, America has lived well beyond its means. The ongoing 50-year deluge of money, credit, and soaring government spending began with Nixon’s repudiation of the gold standard on August 9, 1971.

@porterstansb - Porter Stansberry

America’s experiment with paper money reached its zenith – $7.1 trillion in unfunded government spending – in the insane over-reaction to the flu of 2020.

@porterstansb - Porter Stansberry

Absent financial constraints and protections for property rights, democracies rapidly devolve into competing parasitic factions, each attempting to live at the expense of the “other.” The result is, inevitably, a continuing increase in government spending and government debts.

@porterstansb - Porter Stansberry

During COVID the government printed enormous amounts of money and manipulated bond rates to their lowest point ever. Our banks faced the Hobbesian choice: earn nothing on safe short-term U.S. Treasury notes or earn 1.5% or so on long term U.S. bonds.

@porterstansb - Porter Stansberry

Bank of America made the largest investment in its history. It bought $760 billion of long-term U.S. Treasury bonds and mortgages, with most of the purchases occurring in mid-2020 at the absolute peak in long-term bond prices.

@porterstansb - Porter Stansberry

When Bank of America reports 3Q earnings the losses on these long term bonds will have exceeded its $175 billion in tangible equity capital, meaning any sustained run on its deposits would render it insolvent.

@porterstansb - Porter Stansberry

Through the end of Q2 2023, U.S. banks were sitting on $550 billion in unrealized losses from their holdings of long-duration Treasuries and MBSs. That’s nearly 25% of the total equity capital in the U.S. banking system.

@porterstansb - Porter Stansberry

In the 18 months since the Fed started raising rates in March 2022, depositors have yanked nearly $1 trillion from U.S. banks. Never before in history have we seen deposit flight on this scale.

@porterstansb - Porter Stansberry

U.S. fed debt is now a staggering $33 trillion. That’s up an incredible $10 trillion in the last four years. And the debt bonanza shows no sign of ending. In 2023, the U.S. federal government is on track to run a $2 trillion budget deficit, or 8% of GDP.

@porterstansb - Porter Stansberry

For the first time in 15 years, short-term Treasuries offer a real yield above inflation. Investors are no longer penalized for playing defense. That cash will become worth its weight in gold when this crisis erupts, and world-class businesses trade down to fire sale prices.