The national debt just topped $38T… why inflation is likely understated… checking in on gold and Bitcoin… playing offense and defense with debasement… this morning’s event with Louis Navellier and the Swan Brothers
One week ago today, to little fanfare, the U.S. national debt crossed $38 trillion.
To put that figure into context, it’s more than the economic output of China and the entire Eurozone…combined.
Now, perhaps you’re scratching your head…
“Wait, weren’t we just talking about hitting $37 trillion?”
Yep – but that was in August.
We then added another $1 trillion at the fastest pace in history outside of the Covid pandemic spendapalooza.
For perspective on this speed, here’s the non-partisan think tank Peter G. Peterson Foundation:
Looking at recent history, by decade, the U.S. added $1 trillion to the Debt:
- Every 24 months in the 2000s, on average
- Every 11 months in the 2010s, on average
- Every 5 months in the 2020s,on average
Our latest trillion took just over two months. No advanced math is needed to see where this is headed – the growth is turning into a runaway train.
But the speed of our mounting debt isn’t the only problem. The second issue is the size of our debt service.
Last year, our government spent $880 billion on net interest costs, up a staggering 34% from 2023’s $658 billion (Uncle Sam is desperately hoping for another rate cut tomorrow).
The generally accepted way we contextualize debt service is by comparing it to GDP. The all-time high was set in 1991 (3.2%). But the Congressional Budget Office (CBO) estimates we’ll take that out this year, hitting 3.2% of GDP.
Back to the Peter G. Peterson Foundation:
[Interest costs] are now the fastest-growing part of the budget.
We spent $4 trillion on interest over the last decade, but will spend $14 trillion in the next ten years.
Interest costs crowd out important public and private investments in our future, harming the economy for every American.
Excessive debt contributes to destroying the purchasing power of your wealth – but how much, exactly?
Excessive national debt can trigger inflation by increasing the money supply (via bond issuance to pay for the debt), which erodes the currency’s purchasing power.
On Wall Street, this leads to the “debasement trade,” a strategy where investors flee depreciating fiat currencies and move into hard assets like gold and real estate to protect their wealth.
On Main Street, the depreciating fiat currency means their savings buy less over time. So, they must pay more for daily essentials like groceries and gas as prices rise.
In yesterday’s Digest, we looked at how inflation has destroyed the dollar’s purchasing power in recent decades. We also noted that we were looking at inflation rates using the Bureau of Labor Statistics’ current methodology, which might camouflage the real inflation rate.
But how, exactly?
By changing how it has calculated inflation over the years.
In short, the BLS has rewritten its calculation of the Consumer Price Index multiple times over the years – not to show what things cost but to model how consumers adapt.
The biggest sleight of hand is the “substitution effect.” For example, if steak prices surge, the CPI now assumes you’ll switch to lower-cost chicken, so inflation appears milder.
Of course, that’s not how real life works. If you want a steak, you deserve to know what it costs, not be told you’ll be fine with chicken nuggets.
Then, layer on “hedonic adjustments” that discount price hikes for “better quality” (think computers that have more RAM today than yesterday) and “owner’s equivalent rent” that blunts housing pain, and the official inflation number becomes a managed illusion.
True inflation – the one you and I feel at the checkout line – runs significantly hotter than Washington tells us.
For example, ShadowStats, which calculates inflation per the 1990 methodology, finds that the Consumer Price Index for All Urban Consumers is nearly 8% today.
This is why we urge investors to be cautious about remaining in cash for too long, and play defense with assets like gold and Bitcoin, and offense with high-quality stocks
Now, gold is currently correcting as we predicted it would in our 10/15 Digest:
If you’re considering hopping aboard this rocket ship, you might want to wait for a more attractive entry point.
Gold’s Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) indicators are red hot, suggesting a coming pullback…
Don’t be surprised if gold retreats below $4,000 for a stretch.
Sure enough, as I write Tuesday, gold trades at $3,960. While it could go lower in the short term, we continue to urge investors to have some gold allocation for wealth preservation.
We’ll dive into gold’s price action in a coming Digest, but for now, let’s turn to Bitcoin.
Its performance has been underwhelming for months. As I write, it trades at about $115K, the same level as early July. But our crypto expert Luke Lango believes a big move higher is brewing:
Crypto markets are looking bruised right now. Bitcoin has pulled back to around [$110,000 as of Luke’s writing] …
But step back, zoom out, and the story is actually one of the strongest setups for crypto we’ve seen in years.
In fact, we’d argue that the 12-month outlook has rarely been clearer: the U.S. dollar is structurally weakening, Washington is shifting to bipartisan support for digital assets, and stablecoins are on the cusp of explosive mainstream adoption.
I want to cover more ground today, so I won’t flesh out all of Luke’s points. But here’s a quick synopsis:
The dollar is having its worst year in decades:
This is why Luke frames Bitcoin as both a “risk asset” and a monetary hedge. Yes, it trades with risk sentiment day-to-day, but its long-term correlation is with currency debasement.
Washington is finally pivoting toward crypto:
Between appointing a “crypto czar” and pushing the GENIUS Act through Congress, the executive branch is clearly signaling that it wants digital assets to grow on U.S. soil.
Stablecoins are growing:
Stablecoin settlement volumes are now rivaling – and in some cases surpassing – Visa and Mastercard networks. U.S. politicians are beginning to view stablecoins not as a threat but as a strategic weapon in the global currency race.
Here’s a critical point for skittish crypto investors…
Don’t try to time Bitcoin.
Just hold it through its volatility. If you don’t, you’ll likely miss its biggest moves – with disastrous consequences.
Tom Lee at Altcoin Daily recently made this point, showing that most of Bitcoin’s gains come from just 10 days each year. And if you miss those 10 days, Bitcoin’s average annual return doesn’t just drop significantly – it goes negative.
Bitcoin is likely to grind higher as the dollar weakens, with the potential for explosive upside once legislation passes and institutional flows accelerate.
Base case: $200K+ within 12 months.
As to playing offense…
This morning, investing legend Louis Navellier sat down with market experts Andy and Landon Swan to offer an idea – their “Ultimate Stock Strategy.”
Louis has built one of the most respected quantitative track records in modern investing – pinpointing companies with the kind of fundamental strength that fuels life-changing gains. His Stock Grader system has uncovered 676 stocks that could have doubled your money or more, including early signals on giants like Apple, Amazon, Netflix, and Nvidia.
Meanwhile, brothers Andy and Landon Swan of LikeFolio have taken a different but equally powerful approach – using real-time consumer behavior to predict Wall Street’s next big winners.
By analyzing millions of social media posts, web searches, and online mentions, their Social Heat Score identifies when brand enthusiasm surges long before it shows up in earnings reports. This helps them find surging momentum stocks just as their gains begin to snowball.
When the Swans and Louis compared their approaches, they discovered that some of the same stocks were being flagged by both systems. And this elite group of stocks was producing outsized returns.
Backtesting showed that this “Ultimate Stock Strategy” would have identified more than 240 double-your-money opportunities over just five years, averaging gains of 244%.
This morning, Louis, Landon, and Andy went live, revealing exactly how the strategy works, and even gave away two new buy recommendations – one from Louis and one from the Swan brothers.
If you didn’t catch it, just click here now to watch the free replay and see how Louis and the Swans are combining two proven systems into one powerful way to play “offense.”
Coming full circle…
When you zoom out, everything we’ve covered in today’s Digest connects.
Washington’s runaway spending and a weakening dollar are eroding the real value of your cash – even as official inflation data understate the damage.
This is why investors can’t afford to sit still or hide out in cash.
And while defensive assets like gold and Bitcoin help preserve purchasing power, to truly grow wealth in this environment, you also need intelligent offense – exposure to stocks with both fundamental strength and real-world momentum.
Bottom line: In a world where debt and inflation distort everything, owning the right assets isn’t just smart investing, it’s financial self-defense.
Now, the big question…
Will our national debt hit $40 trillion by Christmas?
We’ll report back.
Have a good evening,
Jeff Remsburg
