The wall is sitting on a 300 trillion Dollar time bomb and this is the reason Why inflation will never end so we know The U.S they are inching closer towards A debt selling crisis the fear has Reached a point where it's pushing Credit default swaps to the highest Level since 2011 and this means Investors are so afraid of a debt Default that they are paying fire Insurance on U.S bonds just in case the House burns down but ironically the Biggest risk to the world right now Isn't the U.S debt yes America's debt is Crazy high is that 31.4 trillion dollars That is the biggest part of that in Absolute terms but it is nothing Compared to the global debt we can see The record 300 trillion dollars and it Is 350 percent of global GDP The Leverage is so high that if this Implodes it could take down the entire Global economy to the Great Depression 2.0 and I want us to understand the big Risk that's building up in the system Today the Federal Reserve they have been Hiking interest rates from zero to near Five percent in less than 12 months and This is putting enormous pressure on Global debt interest payments and the Real damage is to the emerging markets And this is how bad the interest rate Hikes are becoming now SMP Global they Did a shocking calculation that shows us
The global interest payments for just The floating rate that will almost Triple it will go from three percent to Nearly nine percent once the debt is Rolled over and refinanced and this Means on average companies and Governments will be paying three times More the amount of interest just to stay Afloat and according to the IMF this is Unsustainable especially for governments They are projecting Global government Debt rising to 100 of GDP by 2028. now You might say it doesn't matter right Governments can simply print money to Make the debt burden go away they can Simply inflate away the debt but here's The big problem only the United States Can physically do that and with the Entire house of cards collapses the FED Will be forced to print money for the Whole world and this is possibly my most Important video because once you Understand this you quickly realize why The world is trapped in an inflation Hell so while the whole world's focus on The U.S debt imploding the real race is Actually in the emerging markets and They are the ones with the biggest debt Trap which has the real risk of default And this might just be the Black Swan Event that crashes the world economy so Why are emerging markets at a higher Risk of default than the US economy Wells for one simple reason they issue a
Lot of their debts in U.S dollars and According to the Federal Reserve over 60 Percent of foreign currency debt is Issued in dollars and this means Countries sell lots of debt denominated In U.S dollars when the debt payments Come due they need to pay bondholders Back in the green bag now if we just Look at Latin America's dollar exposure We see a frightening situation a huge Chunk of government debt is denominated In the reserve currency Argentina alone Holds over 50 percent of their southern Debt in U.S dollars but here's the big Catch unlike the U.S government we can Simply print dollars through the Federal Reserve to pay back the debt other Countries can't really do that they Don't have a dollar printing press so They need to either earn or buy dollars From the open market to pay back the Bondholders and every time the Federal Reserve hikes interest rates it makes The interest payments higher for these Countries and it pushes them towards the Brink of default Argentina for example Has been forced to sell their dollar Bonds and swap them for that in their Local currency the peso and the reason It's very simple it will help Argentina Save four billion dollars in debt Payments because their dollar reserves Are being depleted and this isn't good News if enough countries begin
Defaulting on their dollar denominator Debt we're going to see a big domino Effect take place in a global economy Remember when you default on your debt Investors will be afraid of lending you Money so your body use go up your Economy slows down and the recession Happens now if this happens to one Country it's a tragedy but if multiple Countries start to improve thanks to Debt defaults you can see how much of a Big problem that will be it is enough to Spark a global recession which will Ultimately affect the United States as Well and this is why if things get bad Enough we'll see the Federal Reserve do A pivot and start lowering rates do you Have to make the debt more manageable to Service for the global economy and as You have guessed this is inflationary When you lower rates you make the cost Of borrowing much cheaper you kick the Can down the road not just for America But for the entire world as well and This is why the U.S will reach the debt Ceiling they cannot afford to default Because it will cost an instant credit Event it will lead to a deflationary Spiral that will almost certainly spark A global recession and when I say the Federal Reserves Ultimate Nightmare is Deflation it's not really inflation it's Deflation and let's understand the Effects this will have on a global
Economy the first effect will be obvious The U.S economy will self-destruct we'll See bond yields in the U.S rise because Investors no longer trust America to pay Back their debt this will cause the Government to default on their Obligations such as Social Security and Health care and that will be Unthinkable Over 60 million people in the U.S are on Medicare and 75 people are enrolled in Medicaid with the average benefit Amounting to eleven hundred dollars per Recipient if a default happens all these Healthcare benefits could evaporate for The average person so can you just Imagine the amount of chaos that will Happen on American Shores but this will Also cause a Global Credit crunch a Default in the U.S will instantly Trigger a dollar shortage for the rest Of the world and here's why in 2021 over 33 percent of U.S debt is held by phone Holders we are talking about countries Like China the UK and the EU Japan alone Has over 1 trillion dollars worth of U.S Bonds and if a default happens suddenly This trillion dollar debt power Evaporates the debt no longer exists Which means suddenly a huge pile of Dollars will just disappear from the System this will cause a Swift and Sudden dollar shortage and this is where Things is just snowball out of control Because the U.S defaulted Japan now
Doesn't have dollars to settle its own Obligations many banks and institutions In the country issue bots denominated in Dollars for example a Japanese bank is Issuing a 2.5 billion dollar Bond Denominator in dollars guaranteed by the Government of Japan So eventually they Need to pay a yield of 4.3 percent to The bondholders every year and in 2026 They need to repay the entire principle And this means they need to have a Constant supply of U.S dollars but if There's a southern dollar shortage Where's the money going to come from Suddenly the chain of default could Spread across the world because I can't Get enough dollars so I can't pay Dollars out as well every investor along The chain will be affected and all these Defaults will cause a big deflationary Spiral where the money supply around the World suddenly shrinks at collapses and Asset prices across the board will also Go down and this is the last thing the Federal Reserve wants to see the whole World becomes poorer they start Consuming less and in today's consumer Driven economy this will spark a daily Recession and this is why it's very Unlikely that U.S will default because It isn't just a recession that will Occur it will wrap up the dollarization Like never before there are already 101 Reasons for countries to deteriorize a
Debt default will just be the final nail In a coffin you'll be the ultimate Excuse to dump the dollar and this is Why the U.S won't let this happen the Debt ceiling will be raised to keep the Game going it's better for a slow Erosion of the Dollar's Reserve status Through inflation than an outright Collapse from a default and this is why Inflation will never end when push comes To the show of the Federal Reserve we Have to print money to save the world And this is the curse of having the Reserve currency if the Emerging Markets Start to break or even the developed Nations the fat will have to print Trillions of dollars to stop the Defaults of happening the Federal Reserve will be the final liquidity Backstop for the entire world so how Will this happen well the federal have To send all these newly print that money To the central banks of the world and They are likely going to do this through The swap lines and that's why we saw a Coordinated move by global central banks To stand by their swap lines to flood The system with dollars in case of a Credit crunch now swap line is nothing Complex it's basically where foreign Central banks swap their own local Currency for US dollars from the FED in Reality they will likely just print up Their own local currency in exchange for
Dollars that were in turn printed up by Jerome Powell so what we have now is a Global money printing scheme going on Suddenly Global dollar debt is suddenly Paid off and the world is flushed with Cash creditors have gotten back their Money and the money supply has increased Thanks to money printing but here's the Big problem it is no longer dead that is Stuck in the system it is now cash on Hand investors now have a ton of money To go back into the market and start Bidding up the prices of everything Right they'll buy even more bonds stocks And commodities because they know the Purchasing power of cash has been Devalued and this is where the strength Of the dollar will collapse because now There's a flood of the reserve currency Circulating around the world essentially This is a global QE where inflation is Spread all around the world from the Federal Reserve and the only other Alternative is that daily deflationary Spiral which could lead to a global Depression well here's the big problem No matter who defaults first the U.S or Emerging Markets it will be a disaster There's no happy ending but because the Dollars the reserve currency the rest of The world will likely implode first the Dependency on the dollar will force the World to scramble to get even more of The currency no matter the scenario of
Who defaults so let's assume the Emerging Markets collapse first they Start to reform on their dollar debt and This will cost a big credit collapse and We'll see a run to the safe haven asset Which is still the US dollar and Treasuries and this will cost the dollar Index to soar and Trigger massive Currency devaluations for the rest of The world countries will have to print Money to acquire dollars for trade so Local inflation will solve and this will Trigger a global inflation wave now if The U.S defaults first and I mean not Paying back bondholders completely it Will also be a nightmare scenario there Will be a sudden dollar Crunch and You'll be so Swift that many other Countries could begin to default on Their own debts as well and what will This mean a deflationary death spiral Unless something is done and this will Cause the FED to step in and print Trillions of dollars and flood the world With liquidity and once again the money Supply increases and inflation source so Either way inflation is the end game it Is the name of the game if either Default happens there will be a collapse That will still lead to an inflation Nightmare sure in the long term the Dollars will become a hot potato Countries will start to unwind their Dollars and they'll start to flood back
To the U.S to buy up assets and this is When inflation finally boomerangs back To the U.S but this is my bet I don't Think that will happen because the FED Will likely choose to inflate the Problem away at the front end and Prevent a collapse and for you and me This this means a gradual inflation Health that will never end and this is Why we Advocate holding hard assets and As we head towards the recession when we See asset prices come down it's time to Accumulate real tangible things of value Because that is the only place that will Store your purchasing power for the long Term and it doesn't have to be just gold Or silver it can be real estate or Farmland as well and this is a global Problem the FED is going to lower rates At print money sooner or later to push Bond yields down and once the recession Strikes the FED we have to print money Again because the only way to fight Deflation is with inflation and realize That a stronger dollar is very bad for The world especially if it strengthens Too much every time a recession strikes The dollar spikes up and this forces the FED to eventually ease their policy and Print money once again if you can see Back in 2008 and 2020 the dollar Index Spiked up dramatically and that's the Blue Line a stronger dollar that spirals Out of control is bad for the US economy
As well and because of this dollar curse The Federal Reserve but to print money And buy up all those bonds to weaken the Dollar once again they need to stimulate The global economy and from the red line We can see during the last two Recessions the FED went in and increased Their balance sheet and this helped to Push down the dollar but at the same Time this also erodes the purchasing Power of the dollar we mustn't confuse The two just because the dollar Index Rises doesn't mean the US dollar isn't Losing value we can see over the years The dollar Index has gradually gone up But the value of the dollar has Gradually gone down at the same time so These two are mutually exclusive and the Reason is simple when you print money You lose purchasing power it's not Rocket science that's why whether you Live in Asia America or Antarctica you Need to buy assets that whole value Because the Federal Reserve will inflate Again sooner or later and if there's a Debt default power will be forced to Print and you win if power prints money To avoid the default you also win so We've got to understand how the entire Financial your system is set up we are Living in a credit-based economy where You need to keep cheap money flowing you Need to constantly inflate the bubble or The entire system will implode and if
You look at how things are going it's Very obvious that interest rates can't Go much higher any longer we are likely Going to cap out at five and a half or Six percent at the higher end we just Need to throw back too much when svb Collapse thanks to higher interest rates The fat capitulated they threw in the Towel and see if the banks they created The emergency backstop to pump liquidity Into the system shooting them from 300 Billion dollars worth of losses due to All the underwater bonds for collateral At par value and give the banks money to Shore up their Capital requirements why Because they knew what happened was Essentially a dollar squeeze from bank Depositors and the same thing is going To happen if foreign banks are all Scrambling for dollars at the same time To pay off their debts they will rushed To their central banks for the reserve Currency and those central banks were to Do one of two things either they get Dollars from the Federal Reserve from Their swap lines or they print up tons Of local currency or use their reserves To buy dollars from the open market both Methods are inflationary the end game is Still inflation but let me know what you Think in the comments below will the US Default on its debt over the global debt Bubble especially the Emerging Markets Implode first let me know in the
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