Debt's Dead End | Matthew Piepenburg

An unavoidable crisis looms as we've got too much debt that we can't afford

When asked last month if the US economy was heading into stagflation, Fed Chair Jerome Powell said he didn't see the "stag" nor the "flation" in the data he looks at.

Well, US Q2 GDP growth estimates as forecasted by the Atlanta Fed's GDP Now service have been weakening, and Q1's anemic reported GDP growth rate of 1.6% was revised further downwards to a paltry 1.3%

That's some "stag" right there.

And CPI remains quite sticky at 3.3%, solidly higher than it was 9 months ago.

So that's some "flation"

To learn how to protect the purchasing power of your wealth in an increasingly stagflationary environment, we're fortunate to be joined today by Matthew Piepenburg of Von Greyerz Gold.

Matt delivers an eloquent excoriation of our folly for building up more debt that we can ever repay (and continuing to do so at a rapid rate).

And he explains why the main casualty of this will be the accelerating erosion in the purchasing power of fiat currencies.

To hear Matt’s advice on what to do about it, click here or on the image below:

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Adam’s Notes: Matt Piepenburg (recorded 6.4.24)

EXECUTIVE SUMMARY

• Matthew views the global economy and financial markets as precarious due to unsustainable debt levels. The world is approaching $400 trillion in global debt, with the U.S. nearing $35 trillion in public debt and having $210 trillion in unfunded liabilities. The U.S. debt-to-GDP ratio is over 120%, and the deficit-to-GDP ratio is around 6-7%, indicating severe fiscal imbalances. Debt influences markets, currencies, politics, and social structures, leading to centralization and opportunism. Historical data has shown that debt destroys economies, implying that current unsustainable debt levels will lead to a grim outlook for the global macro environment.

• He believes markets are overvalued, with the S&P and Nasdaq driven by a small number of companies, mirroring the Dot-Com bubble. Despite potential nominal gains, real returns will be undermined by inflation and currency debasement. The U.S. equity markets, driven by forms of liquidity, may rise, but the purchasing power will diminish due to inflation, which is currently at 3.5% and remains "sticky."

• The Federal Reserve faces a challenge between controlling inflation and managing the growing debt burden. Piepenburg expects the Fed to cut rates or implement liquidity measures, driven by the interest expense on debt projected to reach $1.6 trillion, surpassing the U.S. military budget. Fiscal spending will continue to drive inflationary pressures despite any short-term disinflationary measures.

• Inflation and currency debasement lead to wealth inequality and social unrest. Piepenburg emphasizes that middle-class Americans are severely impacted by inflation, which erodes purchasing power. The official CPI data understates actual inflation, which is felt more acutely by the middle class in everyday expenses.

• Matthew argues that the Fed’s policies will ultimately lead to