Janet Yellen’s reckless front-loading of a third of U.S. debt into T-Bills is one of the most short-sighted and dangerous moves ever made by a Treasury Secretary. Under the false premise that inflation was being tamed and the Federal Reserve would be able to cut rates significantly, she made a fatal bet on cheap borrowing. But reality is now biting hard. Inflation is worse than ever, and debt costs are about to explode.
The U.S. faces rising debt costs as it rolls over a huge chunk of its short-term T-Bills into more stable but much more expensive longer-term maturities. Market makers are already struggling to support this growing supply, and the pressure on yields is set to intensify. It’s government spending gone wild, and inflation is the painful price we are paying for it. The numbers don’t lie. Biden’s final inflation report hands Trump a staggering 5.7% annualized inflation rate, with price increases over the last four years across virtually every category.
Just look at the damage:
- CPI Medical Care: +9.1%
- CPI Apparel: +9.3%
- CPI New Cars: +19.0%
- CPI Used Cars: +21.5%
- CPI Food at Home: +23.2%
- CPI Shelter: +24.7%
- CPI Food Away from Home: +25.0%
- CPI Electricity: +29.6%
- CPI Gas Utilities: +33.6%
- CPI Gasoline: +34.9%
- US Home Prices: +39.4%
- CPI Transportation: +43.5%
- CPI Fuel Oil: +44.6%
- CPI Auto Insurance: +60.9%
- CPI Dozen Eggs: +238%
Inflation isn’t just a number on a spreadsheet anymore; it’s a daily reality for Americans. And this is just the beginning. As U.S. debt rolls over into new bonds at significantly higher interest rates, taxpayers will bear the cost of this decade of zero-interest-rate policy (ZIRP). A prime example: a $66 billion 10-year bond from February 2015, with a 2% fixed coupon, is about to mature tomorrow. It will be replaced by another $66 billion bond with a 4.55% coupon. That single rollover will add $1.67 billion to the national debt every year for the next decade. Bond auctions like these are happening daily, and the price we pay will continue to climb.
But it’s not just the debt— it’s the long-term consequences. By 2032-2035, we could be paying 5% on all the debt accumulated during a period of 4% unemployment and 3% real GDP. The damage will be profound.
So, what can you do in a situation like this? The only real trade is hard money. Gold for risk-off, Bitcoin for risk-on. And as long as policymakers keep the economy hot on borrowed money, stocks will continue to be a good play—at least until the wheels come off.
Sources:
https://x.com/DarioCpx/status/1889700758008021306
https://x.com/SpencerHakimian/status/1889428912830038149
