Chief Investment Strategist, The Freeport Society
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
– Ernest Hemingway, The Sun Also Rises
Want to know the difference between Uncle Sam and Mike Campbell, the bankrupt socialite from The Sun Also Rises?
Campbell had a rip-roaring good time pissing his inheritance away. It was a blur of expensive booze and cheap women.
He may have ended up as a bitter, broke laughingstock. But at least he had some good stories to tell.
Uncle Sam is a bankrupt laughingstock, too – at close to $37 trillion in hock.
But what did he spend it on?
It’s also a bit of a blur. But it wasn’t particularly fun.
There were a few Middle Eastern wars, if memory serves.
And bombs. Lots of bombs. Those weren’t cheap.
There were also banks to bail out. Automakers to rescue. And an alphabet soup of toxic mortgage bonds that needed resuscitation.
There was also that time when the feds told everyone to lock themselves in their homes and sent them “stimulus checks.”
Yeah, that was a thing. It wasn’t cheap, either. All told, those checks cost almost $1 trillion dollars.
But mostly, Uncle Sam buried himself in debt making promises he couldn’t keep to senior citizens.
Social Security has been running deficits for years, and its trust fund is set to be depleted in about a decade.
Medicare’s finances don’t look much better. The present value of Social Security and Medicare’s shortfall over the decades ahead is projected to be about $73 trillion.
Add in the roughly $4 trillion in extra deficits that President Trump’s “big, beautiful bill” will add to the tally over the next 10 years, and it amounts to disaster.
Cassandras like me have been screaming about the risks of uncontrolled federal spending for decades. And if you’re a regular Navigator reader, you’re likely as concerned about the situation as I am.
But mainstream investors have seemed happy to gobble up as many bonds as the U.S. Department of the Treasury could issue.
Until now, that is…
Since last September, the price of supposedly “risk free” Treasury bonds plunged close to 20%.
And turmoil in the Treasury market seems to have been the reason Trump pushed pause on his Liberation Day tariffs.
The 10-year yield jumped from below 4% to 4.5% within days. And the 30-year yield topped 5%, its largest three-day increase since 1982. (Yields and prices move in opposite directions.)
Trump, along with his Treasury Secretary, Scott Bessent, didn’t like what they saw. And they pushed the pause button.
For most folks, these events are hardly registering. But as we’ll look at today, they are classic hallmarks of the beginning of a debt spiral.
That means America’s fiscal reckoning is closer than you think.
So, if you don’t already have a plan to protect yourself, now is the time to put one in place.
I’ll get to that in a moment – plus a new warning from the founder of our parent company, MarketWise – about just how bad things can get and what you can do about it.
First, it’s important you understand the problem we’re facing.
This Is What a Debt Spiral Looks Like
A debt spiral is when a government, company, or individual borrows more money just to pay off existing debt.
This leads to ever-growing interest costs and worsening financial instability. It’s where “gradually” morphs into “suddenly.”
That’s where Uncle Sam is right now…
This year, the U.S. government’s interest payments on its national debt have surged to unprecedented levels. They will total about $952 billion. That’s triple 2020 levels. It’s up fivefold since 2010.
It’s also more than the defense budget (which clocks in at $850 billion in 2025)… more than we spend on education (about $150 billion) veterans’ benefits (about $300 billion)… and more than we spend and transportation and infrastructure (about $150 billion).
It’s no wonder the three major ratings agencies have stripped the U.S. government of its pristine Aaa credit rating.
And that’s just the beginning.
The U.S. adds about $3 billion to the debt – every day.
As more people start to worry about the consequences of all this spending, the less demand there will be for bonds. That pushes down their prices and pushes up their yields.
And as yields rise, those interest payments soar.
That’s where this all gets really nasty.
If Uncle Sam is forced to slash spending or, worse, raise taxes to stave off a debt crisis, it will likely push us into a nasty recession.
It’s also the sort of thing that could trigger a currency crisis.
I don’t mean that the dollar drops by 20% against the euro.
I’m talking about the kind of situation we saw in Argentina, where you needed a gym bag full of cash to buy a ham sandwich.
How to Protect Yourself
I’ve been extolling the virtues of gold and Bitcoin as “anti-dollars” since we launched the Freeport Society in December 2023.
They’ve been official recommendations in our Freeport Investor advisory since then also.
Over that time, gold has climbed 62% versus the dollar. And Bitcoin is up over 150%.
That doesn’t mean it’s too late to act. If I’m even half right about what’s coming, both these anti-dollar assets are still cheap.
So, if you don’t yet hold some gold and Bitcoin along with your stocks, do something about that now.
You don’t have to do anything fancy… or complicated.
Simply open up your regular brokerage account and buy shares in the SPDR Gold Shares ETF (GLD) and the iShares Bitcoin Trust ETF (IBIT).
This will give you exposure to price rises in gold and bitcoin and go a long way to hedging your dollar risk.
I’d also encourage you to pay attention to a new warning from Porter Stansberry, the founder of our parent company, MarketWise.
If you’ve followed Porter’s work over the years, you know it pays to listen.
He called the bottom, nearly to the day, of the COVID-19 market panic in March 2020. And he said the major U.S. stock indexes would hit new all-time highs again by the end of the year – which they did.
But he’s best known for predicting that the world’s largest mortgage brokers, Fannie Mae and Freddie Mac, were going to zero in May 2008. He also predicted General Motors’ bankruptcy in January 2007.
And he says his new prediction is bigger than both of those.
In short, one of America’s biggest institutions is about to go broke, and millions of Americans are unprepared for what happens next.
That’s why, this Thursday, June 5, Porter is going public with his new warning.
He’ll show how bad things could get if the government keeps having trouble selling bonds.
He’ll explain why, even though stocks have rallied since Trump’s tariff pause, this is not the time to get complacent about your investments.
He’ll detail why buy and hold won’t save your portfolio this time around.
And he’ll reveal what he believes is the most dangerous investment in America today.
If the recent bond market volatility is any indication of what’s ahead, this may be the most important financial message you’ll see all year.
It’s free to attend. Porter just asks that you register in advance for it here.
To life, liberty, and the pursuit of wealth.
P.S. It’s not just the U.S. government that’s deep in debt. Americans have accumulated nearly $500 billion in extra credit-card debt since the beginning of 2020.
And in April, 25% of Americans reported they were now using “buy-now, pay-later” services to pay for groceries
As Porter says, this is NOT normal.
Just because others are complacent doesn’t mean you have to be.
So, if you sense that, despite the rebound in stocks, the market feels riskier than it did a few months ago… And you can feel that life in the years ahead is about to become much harder for you, your neighbors, and millions of Americans… make sure to register for Porter’s event on Thursday by going here now.