They didn’t hedge. They didn’t even flinch. A new Jackson Hole paper opens with this line:
“In our baseline, it is possible to push long-run debt to 250% of GDP without raising interest rates.”
source
That isn’t reassurance. That’s a loophole. Four economists ran models out to the year 2100, assuming that as long as investors keep swallowing U.S. debt, the system can carry the weight. They built in conditions that don’t exist in the real world if demand stays strong, if fiscal consolidation trims the gap, if nothing cracks. It’s not a forecast. It’s a fantasy.
But outside the model, the bleeding is real. The Treasury has already paid $1.2 trillion in interest over the past twelve months. By 2026, the Congressional Budget Office says that climbs to $1.4 trillion.
“The longer this adjustment is delayed, the more government debt supply outstrips its demand, eventually making government debt unsustainable.”
source
That warning was buried. But it tells the truth the headline won’t. Supply runs ahead of demand. That is the point when the bond market breaks.
History already shows the direction of travel.
“$1 in 1913 had the same purchasing power as $26 in 2020.”
source
That’s a 96% collapse. The dollar has been hollowed out. Since 2000, CPI has nearly doubled, from 172.2 to 323.0. An 87.6% surge in prices. The currency didn’t bend. It snapped. source
The longest bear market:
The US Dollar’s purchasing power.
Over the last 100 years, the US Dollar has lost -95% of its purchasing power.
Since 2000, the US Dollar has lost over -40% of its purchasing power.
Own assets or be left behind. https://t.co/p1j6vbRAMg pic.twitter.com/x8FgimjfCx
— The Kobeissi Letter (@KobeissiLetter) August 23, 2025
And what did Congress do? It stapled another 9.5 points onto debt projections with the One Big Beautiful Bill Act. That wasn’t in the January models. It was tacked on later. The paper absorbed it. The media ignored it.
Meanwhile, Powell repeats that the Fed is “data dependent.” The data says inflation is sticky, debt is exploding, and jobs are vanishing. In 2025 alone, 461,000 jobs were revised away. That’s more than the population of Scottsdale erased from payrolls.
This is the real sleight of hand. The paper doesn’t say “we should.” It says “we could.” And “could” at 250% debt-to-GDP is not policy guidance. It’s a shrug in the face of collapse. It is permission to drift until the system snaps.
IMO
The Fed is seeing economic data that really scares them for Powell to pivot like he did today.
It’s not all about fearing Trump. https://t.co/S2LjCaqOfy
— QE Infinity (@StealthQE4) August 23, 2025
