August 19, 2026
Over the years, several members of the Federal Reserve System, “The Fed” have cautioned Wall Street, and the Politicians that running annual deficits was “unsustainably.”
Now as the size of that cumulative budget deficit hits $40 Trillion Dollars, we are beginning to see warning signs in the economic system as the interest rate on U.S. 10 year, and 30 year bonds required to attract investors reach levels not seen since 2007, just before the implosion of Lehman Brothers, AIG and the sub prime mortgage crises.
Is another crisis ahead?
Or is: “This Time is Different?”
The Trillion Dollar Question is: Where is the money going to come from to fund the growing deficits in all the major economic players?
Japan, USA, China, Europe all are running massive annual deficits which is being covered by money printing of Dollars, Yen, Euros and the Chinese Yuan.
Adding to that is a demand for new money, to finance these mega Data Centers behind the technology of Aartifical Intengillence, A.I.. which is met by just printing more Dollars.
It is simple economics. The more Dollars you Print, the less purchasing power, or value, each dollar will have.
Since the lost of value is a slow erosion of faith in the stabiity of the dollar, the year to year loss of value is generally ignored by the public, until some event causes a sharp increase in prices.
Such is the current situation with Trump’s war with Iran. Tremendous amounts of money is being spent to maintain a military armada in the Middle East adding to the Trillion Dollars of Interest which must be paid on the existing debt.
A similar problem exists in Japan, where their Debt to GDP ratio, exceeds 200%. After many years of money printing to allow Japan to its deficits with low interest rates, the spike in oil prices is forcing Japan’s Central Bank to raise interest rates to stop the decline of the value of the Yen.vs the Dollar.
The same is happening in all the major economies of the World as investors see the growing risks to their investments because of inflation and demand higher interest rates to compensate for that loss of value over time.
As Hemingway descibed it in The Sun Also Rises.
How did you go bankrupt?
“Slowly, then All at Once”