Shocking TRUTH About U.S. Debt Revealed (Uncut) 02-08-2025

Shocking TRUTH About U.S. Debt Revealed

The United States debt is exploding higher, now over 36 trillion dollars. Can Donald Trump, Elon Musk, and Doge stop the U.S. debt from going to 40, 50, 60, 100 trillion dollars, maybe even more? I’m going to reveal the truth about the U.S. debt right now in one simple, fast step. Step number one, let’s go over what they’re hiding.

We start with a chart going all the way back to 2007 to 2010. You’ll notice this is the GFC. This is the S&P 500.

On the left, we go from 800 up to 1600. In 2007, we’re just humming right along, going up, up, up, up, up. We get to a point almost, right around 1600, and then the Fed starts to cut interest rates.

The market starts to sniff out that there’s something potentially wrong and starts going down. We get a little bit of a bump, but then a complete collapse in the middle of 2008 when it becomes obvious that stuff is hitting the fan. During this time, the S&P 500 went down by about 50%.

Now, a lot of people watching this video right now would say, yeah, George, I know that makes sense because we had this big thing called a housing crisis. Not really. I’d like to remind everyone that back then, the default rate on mortgages went from 2% to about 5%.

Not that big of a deal. In fact, if I would have asked most of you what the default rate went to, you probably would have said 40%, 50%, 60% because that’s the impact it had on the financial system and things like the stock market. But to understand the truth about what happened during the GFC, which is what we have to do to understand the truth about the U.S. debt today, we have to look at it as a financial crisis.

And most of you, again, watching this video would say, okay, George, I get that because of these mortgage-backed securities. They were securitized, these derivatives, they were on the bank’s balance sheets all over the world, and the bank’s balance sheets, you blow a hole in them, and all of a sudden the system collapses. Again, not exactly how it played out.

Let me show you what I’m referring to. We have to look at the plumbing of the financial system to really get our head around what caused this 50% decline. And at the end of the day, the 50% decline or the financial crisis or the issues within the banking system were a result of a lack of liquidity.

To show you what I’m referring to, editor, let’s cut right to my desk. Let’s look at a diagram from my good buddy, Jeff Snyder, over at Eurodollar University that shows how the banks that make up the global monetary system actually function, how they operate amongst one another, and how they create dollar liquidity that is needed for the financial system to operate, or in this case, for the financial system to actually survive. We’ve got Bank of Russia, Cayman Islands, Singapore, Montreal, Bahamas, Switzerland.

We’re just making up these names just for the sake of the example. What I want you to focus on is first all these arrows. This means that the credit is moving from one bank to another.

The Bank of Russia is issuing credit to the Bank of Cayman Islands. The Bank of Cayman Islands is issuing credit to Singapore, and so on. Now let’s look at every place on the diagram that is highlighted in yellow.

For the Bank of Singapore, we’ve got an interbank repo. Bank of Bahamas, we have another interbank repo. Then we go over to these global dealer banks, the first dealer bank, and then BSD Global Dealer Bank.

They are actually lending the treasuries, in other words, the United States debt to these banks in order for that repo transaction to happen. Another way to look at this is U.S. treasuries, more specifically T-bills, are at the heart of the global monetary system. Without T-bills, you’re not going to have dollar liquidity, because they are the necessary collateral.

They are the necessary component. And without dollar liquidity, the whole house of cards collapses. Now I know a lot of you watching this video right now are saying to yourself, okay, George, I understand what you’re saying about the T-bills.

But every time I listen to an expert or turn on the mainstream media financial news, they always talk about liquidity in terms of bank reserves, the Fed’s balance sheet. So if the Fed does QE, oh my gosh, they’re increasing the amount of bank reserves in the system. Therefore, they’re increasing the liquidity.

So if we really want to get specific about this or accurate, forget about these stupid T-bills. No, no, no, no, no. The center of the monetary solar system is the Federal Reserve, their balance sheet, and again, those bank reserves.

Well, let me show you why that’s wrong. It goes back to the plumbing. You see that diagram we just looked at was, or this is basically my version of that diagram.

So you’ve got bank A, B, and C, and they are trading and extending credit to one another. So you’ve got all these dollars, dollar credit going from bank A to bank B to bank C, from C to A, and the collateral they’re using are these T-bills. Well, why? Why are they not using those bank reserves? Just like normal plumbing going to a house, it’s all about the pipes, believe it or not.

So think about these pipes that connect the balance sheets just like you would think about pipes in your own house. So the balance sheets of these banks, A, B, and C, are connected. And they’re also connected to, let’s say, BS Bank.

Now, BS Bank is full of BS, but the reason, that’s not why I called them BS Bank. I called them BS Bank because they have a pipe that goes to the Fed’s balance sheet. In other words, they have access to the Fed’s balance sheet.

They have an account with the Federal Reserve. So if the transaction is just between the Fed and BS Bank, well, yeah, bank reserves matter. They’re definitely liquidity.

But bank A, B, C, they only have a pipe that goes to BS Bank. They do not have a pipe that goes to the Federal Reserve. Now, it is possible they can transact and they can settle, they can create credit using the Fed’s balance sheet through BS Bank, but that’s more cumbersome.

That’s more labor intensive, and it’s more costly. The reason why there’s so much demand for these short-term treasuries, even from the big banks that have a pipe or access to the Fed’s balance sheet, is because in the real world, in the global monetary system, those T-bills have far more utility than the bank reserves that just exist on the balance sheet of the Federal Reserve. So here’s the point in the video where we connect all the dots.

Let’s go ahead and put all the pieces of the puzzle together. The key we’ve just gone over is collateral is vital to dollar liquidity, and dollar liquidity is vital to the financial system. Okay.

Well, when we had this 50% decline in the S&P 500, what happened to the overall collateral that was in the system? Well, let’s just imagine we have a pie chart of 100% of the collateral. Obviously, I’m oversimplifying it. And let’s assume for a moment, 50% T-bills and back then, 50% mortgage-backed securities.

Effectively, they were the exact same thing. The mortgage-backed securities had the exact same risk profile as a T-bill. In other words, zero risk, until we see the defaults go from 2% to 5%, and the narrative changes in the mainstream media.

Then all of these banks in the Eurodollar system that were using T-bills and mortgage-backed securities said to the other banks, now we are only accepting T-bills. So what happened is almost overnight, you had 50% of the collateral in the global monetary system disappear. This was the real catalyst that created the global financial crisis.

So now let’s go ahead and fast forward to 2025. We know that Janet Yellen is on her way out as far as managing the treasury, and Scott Besent is coming in and taking the job. But what’s interesting is if you read Scott’s comments before he took the job, he was very critical of Janet Yellen.

He was out there shaking his fist and saying, Janet Yellen sucks. What she is doing is terrible for the United States. What was he talking about? He was talking about, and I’m exaggerating, he wasn’t literally saying Janet Yellen sucks.

Just want to be clear there. He was implying this in a very professional way. But what he was referring to specifically is how Janet Yellen had changed the issuance of U.S. treasuries, U.S. debt.

So normally, let’s say they would issue 50% at the long end, so say 10-year, 30-year, and 50% at the front end with T-bills. Again, I’m just oversimplifying for the sake of the example. And if interest rates are very low, the argument is if interest rates go up in the future, it’s going to impact a lower percentage of the outstanding debt for the United States.

Let’s just assume for a moment you have 10 home mortgages, and five of them are fixed rate and five of them are adjustable rate. Well, if interest rates go up, that’s not going to impact five of your homes. Now let’s use a different example with another person, and let’s just assume they have nine properties where they fixed the mortgage.

Well, if interest rates go up, then that’s only going to impact one of their properties. So this was Scott’s criticism of Janet Yellen. She’s issuing too much at the front end of the curve, which basically is turning the debt of the United States government into an adjustable rate mortgage as opposed to a higher percentage of the debt being like a fixed rate mortgage.

But now what do you think Scott’s doing now that he has Janet Yellen’s job? Editor, let’s go ahead and cut right to the internet. The Treasury Department came out and made an announcement. It will be issuing more short-term bills than usual.

Hmm, that’s weird. And that announcement came despite new Treasury Secretary Scott Besant previously criticizing his predecessor, Janet Yellen, for issuing unusually large amounts of shorter-term debt. So you see what just happened is Scott was sitting there pointing the finger at Janet Yellen, saying she sucks, she’s an idiot, she’s a moron, she’s jeopardizing the long-term health, financial health of the United States by basically giving us this adjustable rate mortgage with a higher percentage of our overall debt.

And then as soon as he gets into office, as soon as he takes the job, he goes from saying Janet Yellen sucks to, oh yeah, Janet Yellen’s a genius. And that whole issuance policy that I was criticizing before, yeah, we’re actually going to do the exact same thing. So obviously what happened is he probably got a phone call from Jamie Dimon, or let’s just say someone in the know that actually understands the global monetary system.

And they said, yeah, Scott, you can’t change the issuance. And here’s why. Because if you change the issuance, you reduce the amount of T-bills in the system.

If you reduce the amount of T-bills in the system, that takes out a portion of the collateral, which takes out a portion of the dollar liquidity. And if there’s no liquidity for the global monetary system, because you’re taking out the necessary collateral or a percentage of the necessary collateral, then we are going to get a repeat of what we saw during the GFC. And Scott, I’m guessing you don’t want that to happen on your watch.

So what truth about the United States debt does this reveal? Well, unfortunately, we are in a position as the United States that’s a lot like Triffin’s Dilemma or Triffin’s Paradox. But instead of the paradox being that there has to be more and more United States dollars, now we’re in a situation where there has to be more and more and more United States treasuries. There has to be more and more collateral.

Therefore, the debt of the United States needs to continue to go up. So even if Donald Trump, Doge, and Elon are successful at cutting back government spending and making it more efficient, at a certain point in time, they’re going to get that call. And they’re going to have to make the decision.

Do you continue to cut spending, therefore reduce collateral, and jeopardize the global monetary system? Or do you stop what you’re doing to avoid the probability increasing exponentially that we have another 2008 and 2009? And for those viewers who are sitting there looking at this saying, George, well, at some point in time, we’ve got to make a difficult decision. And Trump is going to put America first. He said that over and over and over again.

And we just can’t be held hostage by what’s happening in the global monetary system. We can’t continue to grow our debt, which makes the economy less and less efficient, which lowers the standard of living for the average American, just to support this euro dollar system or what’s happening outside of the United States. And I totally get it.

But what you have to understand is that we are in an interconnected world. We are in an interconnected financial system and global monetary system. So if you decide to go ahead and starve the system of the collateral, the United States debt, by making the United States federal government more efficient, then what’s going to happen, or what likely is going to happen, is a repeat where the S&P 500 goes down by 50% and let’s just say housing goes down by 50%.

And what does that do for the standard of living of the average Joe and Jane? So the truth about the United States debt is that whether we like it or not, it’s most likely going to continue to grow. But it isn’t all bad news. You see, if we can deregulate, if we can get rid of the bureaucracy and the red tape, we can grow the economy faster than government spending.

And therefore, the percentage of government spending in relationship to GDP goes down. And on net balance, that’s going to be beneficial to the overall economy. It’s going to make it more efficient.

It’s going to allow us to create more goods and services, which at the end of the day is what true wealth is all about. Hello fellow Rebel Capitals, wanted to let you know of a brand new channel I started where I’m going to be interviewing all of your favorites, Lynn Alden, Chris McIntosh, Robert Kiyosaki, Doug Casey, Luke Groman, Brent Johnson, Jeff Snyder, Peter Schiff, Mike Maloney, just to name a few. So to make sure you never miss one of these incredible interviews, you’re going to want to click the link in the description right now and subscribe to Rebel Capitalist Interviews.

And I will see you on the next video.