The US Debt Collapse Everyone Predicts Is Wrong
episode
Making Billions: The Private Equity Podcast for Fund Managers, Alternative Asset Managers, and Venture Capital Investors
27 min
1 speaker
3 chapters
transcribed 1 month ago
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Transcript generated automatically by AI and may contain errors.
Why do people think a U.S. debt collapse is imminent and why is that view wrong?
Everyone is waiting for the U.S. debt collapse. The YouTube thumbnails, the doom accounts, the guy at the dinner party who just discovered the national debt clock. They're all bracing for the same thing. The crash, the default, the day it all comes tumbling down. Well, I'm here to tell you it's not coming. It's not the way you think, though. What is coming is quieter, slower and far more dangerous. Because it's already happening. And most people can't see it. It will make a small number of people who understand it significantly wealthier. And it will quietly impoverish everyone who's sitting in the safe assets waiting for collapse that never arrives. So by the end of this episode, you're going to know exactly which of those two groups you're in.
And you're going to have the tool to prove it all in your own book. Before we dive in, just a word from our sponsor. When doing deals, we all know that raising capital is the one thing that unlocks everything. That's why I've partnered with Reef Pass investors that are actively funding deals right now. So if you're a deal syndicator or a founder thinking about launching an M&A-focused buy and build platform, reach out to Reef Pass investors at reefpassinvestors.com. They are one of the best investors in the game that are helping you launch a new long-term holding company. So here's what I want you to do. Click the description in the notes and contact them for a discovery call and potentially get an invite to pitch your next M&A deal.
Now, let's get back to the show. Before we dive in, just a quick disclaimer. Nothing in this episode is legal, financial, or tax or investment advice. This is just for entertainment purposes, and you should always check with accredited professionals before making any decision from this show or otherwise. Now, with that said, let's dive in. So let me say this thing that's going to annoy both camps in this debate. The debt doomers are going to hate me and the deficits don't matter crowd is going to hate me too. Good. When we, when both extremes are mad at you, they're usually standing on the truth somewhere. And here it is. The United States is not going to collapse under debt and the debt. Absolutely. 100%.
It matters. Both of those are true at the same time. So here's what doomers get wrong. A country that borrows in its own currency, its own printing press, its own central bank does not go bankrupt the way, say, a household does or the way Greece did. Greece borrowed in euros. It couldn't print euros. So Greece faced a hard default, a real sorry, there's no money moment. The United States borrows in dollars and it can create dollars at will. It never will be forced in that kind of default. We'll never send you a letter that says we can't pay. But, and this is the part that deficits don't matter crowd refuses to look at. That doesn't mean you get paid back in anything worth having. Because there are two ways to default.
There's the honest way, you don't pay. Then there's the sneaky way, you pay back every dollar you promise, but each of those dollars is worth a fraction of what it was when you lent it. The first is default, but the second is debasement. And debasement is the entire history of every empire that ever over levered. Rome clipped its coins. Every reserve currency in history eventually inflated away its obligations. Not with a bang, with a slow but deliberate erosion. So the real question is not, will the US collapse? The real answer to that is no. The real question is, as the government inflates and represses its way out of $39 trillion of debt, Will you be a holder of the assets it needs to confiscate or an owner of the assets it cannot?
That's the whole game, my friends. Let me show you the machine underneath it all. Three mechanisms. Then I'll show you how to position. So everything on this show runs through one single formula. I call it my fundraise formula. It is capital equals trust times the transaction. capital is never just the deal it's the trust that makes the deal possible and it's multiplied by the mechanics of the transaction itself and here's why that formula is the key to understanding sovereign debt because a government bond is nothing but trust when you buy a 30-year treasury note you are making a single bet and that bet is you can trust the us government to pay back in dollars that still hold their value three decades from now
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Chapters
3 chaptersSpeakers
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