The Physics of Money

Part 1: The Crime Scene (Evidence)

Since 2020, the mask has slipped. The charts below are not opinions. They are the vital signs of a dying currency.

Money Supply (M2)

Since 2020, the US money supply has grown by more than 40%. Roughly one-quarter of all US dollars in existence were created in the last 5 years. Between 2020 and 2021 alone, the US printed roughly 27% of all dollars ever created in the nation's history, totaling over $6 trillion for stimulus, PPP loans, and bailouts.

The Fed's Balance Sheet

The Federal Reserve holds over $7 trillion in assets; it cannot sell these without crashing the bonds market, but continuing to print money to buy more assets will crash the dollar's value.

Deficit and Debt-to-GDP

Federal deficits are running above 6% of GDP during peacetime. US debt to GDP is around 122% and is projected to exceed 130% within a decade. This 130% threshold is the point at which nearly every country in history has collapsed, gone into revolution, or defaulted.

Part 2: The Core Argument (The Debt Flywheel)

The central mathematical driver is that debt is compounding faster than the income needed to service it. This is referred to as a "debt flywheel that is now running out of control". Because compounding interest is a perpetual increasing machine, the debt guarantees that the country will eventually have to default.

Warning Signs

Markets, which are "confidence Ponzi schemes," are beginning to show signs of instability. Commercial real estate delinquency rates are now higher than they were in 2008.

The stock market has detached from fundamentals, and there is over a trillion dollars in margin debt for the first time in history.

If confidence is lost, any major event could cause prices to reset violently across every asset class at once, leading to massive losses of wealth.

Part 3: The Trap (Fiscal Dominance)

The economic trap preventing a solution is fiscal dominance, meaning the government's spending and debt burden is so large that the Fed has lost control of its ability to mediate markets through monetary policy.

The Fiscal Dominance Doom Loop

The Fed is caught in a self-reinforcing trap:

• If the Fed raises rates to cool asset inflation, the cost of servicing the $37 trillion national debt would spike, forcing the Treasury to issue even more debt just to make interest payments. This means printing more money, driving debt and interest payments higher in a "flywheel of death".
• If the Fed cuts rates to alleviate the interest burden and ensure government solvency, the cheaper credit would flood the system with more money, causing bubbles to continue inflating until everyone loses faith in the system.

The Imminent Funding Crisis

The government is borrowing $50 billion every single week. In the past 18 months, the US Treasury raised roughly $2.5 trillion in new debt, primarily purchased by excess private cash in money market funds, but this pool of "easy buyers" is now "almost entirely drained".

Collapse Triggers and Timing

The debt trajectory will eventually lead to domestic civil war over a shrinking economic pie. The system will collapse when one of these catalysts hits:

• A Failed Treasury Auction: Investors refuse to buy US debt without much higher yields, signaling the loss of confidence.
• A Credit Market Freeze: Repo markets seize because there is not enough collateral to roll overnight loans.
• Inflation Reaccelerates: Forcing the Fed to tighten into a weakening economy, triggering a cascade of defaults.

This concludes that the collapse is mathematically certain and will take no more than 10 years.