Bloomberg Economics has run a million simulations to assess the fragility of the US debt outlook. And in 88% of the simulations, the results show it ending in disaster. Per the report, in the end, it may take a crisis, and last summer provided a foretaste. So let’s dive into the simulation so you can see the odds of the potential outcome. We’re going to look at the debt spiral number so you can get an idea of just how fast it’s spiraling out of control.

We’re going to look at the only four options for getting out of this, which is really just one option. And then we’re going to look at how we should be playing these 88% odds. Because as investors, these 88% shots don’t come around very often. So let’s go. All right, welcome to the channel if you’re new, my name is Mark Moss. I make these videos to change the way you think about money.

One of the ways we should think about it is understanding risk and understanding odds. As investors, we don’t just yolo into positions and expect the best. We always need to think through them from a risk adjusted standpoint. And when we see something like 88% odds, I call that asymmetric. We should pay attention. Now, per Bloomberg, a million simulations, one verdict for us economy, and that’s debt danger ahead.

The Congressional Budget Office, the CBO of the United States government, warned in its latest projections that us federal government debt is on a path to a level of debt to GDP that’d be much higher even than in world War two. Now, in my opinion, and per Bloomberg as well, their numbers are way too optimistic. With uncertainty about so many of the variables. Bloomberg Economics has run a million simulations to assess the fragility of the debt outlook.

And in 88% of the simulations, the results show the debt to GDP ratio is on an unsustainable path. What does that mean, unsustainable? Well, it means it can’t continue. Now, that’s defined as an increase over the next decade. Now, before we dive into the simulations, let’s just stop and take a look at the debt. Let’s look at the path. Let’s look at the pending spiral that we’re on.

So, first of all, debt problem. What problem? Treasury Secretary Janet Yellen told lawmakers in February, I do believe we need to reduce deficits and to stay on a fiscally sustainable path. Okay, well, she makes it sound like we’re on one, but the rest of the world doesn’t seem to agree. The Bureau of the Fiscal Service reported in the executive summary to the fiscal year 2021 and 2023, that the current fiscal path is unsustainable.

They show historical and current policy projections for receipts, non interest spending by major categories, net interest and total spending expressed as a percent of GDP. And this shows us that the primary deficit being the difference between non interest spending, which is shown in red, and total receipts, which is the bold black line. It’s important to see because the ratio of the primary deficit to GDP is useful for gauging long term fiscal sustainability.

Now, per Peter G. Peterson foundation, the department of the treasury redefines sustainable fiscal policy as one where the ratio of debt held by the public to the GDP, the debt to GDP ratio, is stable or declining over the long term, end quote. We’re certainly not stable and we’re certainly not declining. But they state that the fiscal path of the US government is currently unsustainable because the ratio of debt held by the public as a percent of GDP is expected to rise sharply.

Now, the steady rise by 2098 will more than quintuple the debt to GDP ratio relative to its current level, which is already near its all time highs. Now, the US government debt machine is truly out of control. And history, being the best teacher, has always shown that at times of rapid debt increases leading to high inflation, there’s two types of assets we want to buy and one type of assets we want to stay away from.

Now, if you’re not sure what those are, I’m going to go through this live to help you out, show you exactly what I’m doing to prepare my assets for this shift. I’m going to break down about 20 to 30 charts to show you how to build a detailed plan of exactly what to buy and how to position to ride this inflation wave. It’s a free event. I’m going to stay on.

I’m going to answer all your questions live to make sure you know exactly how to implement these wealth strategies. So check out the link in the description down below. Now this is incredible on its own, but even more importantly, to understand the debt spiral, the US, unlike everyone else, funds all this with very short term debt, which you can see in the red on the chart. Now, this has been par for the course during times of recession, times of emergency.

But what are we doing right now? And currently, the US is adding $1 trillion of debt about every 100 days right now, which is bad. But the real problem is the interest payments on the debt, which have exceeded $1 trillion per year just in interest. And we’re going almost straight up like completely parabolic and per bank of America’s heart net US interest is projected to hit $1. 6 trillion by the end of the year.

Make it the largest us government outlay. More than health services, more than Social Security. Okay, so you get it. The deficits are bad and they’re getting worse. And they’re getting worse at a parabolic rate. So now let’s look at what Bloomberg simulations show us, the four options for getting out of this one, really, and how we should play these 88% odds in our favor. Okay, so as I mentioned, Bloomberg Economics ran a million forecast simulations on the US debt outlook.

88% of them show borrowing on an unsustainable path. Bloomberg Economics forecast model uses market pricing for future interest rates and data on the maturity profile of bonds. Now, keeping all the other cbos other assumptions in place, that shows debt equaling 123% of GDP in the next decade. Now, just for a side note, I’ve talked about this many times on the channel. Per many research and studies that have been done, once a nation reaches more than 125% debt to GDP, there’s basically no coming back.

So they’re projecting that we’ll pass that. Now, debt at that level would mean servicing costs reach close to 5. 4% of GDP, more than 1. 5 times as much as what the federal government spent on national defense in 2023 and comparable to the entire Social Security budget. And higher interest rates equal even more debt stress. And the world understands this, Fed Chair Jerome Powell said earlier this year it was probably time or past time for politicians to get going in addressing the unsustainable path for borrowing.

Even Fed Chair Jerome Powell gets this, former treasury secretary Robert Rubin said in January. The nation is in a terrible place with regard to deficits. As for how things might end, well, Bloomberg tells us about britains experience in the fall of 2022, when the gilt market blew up, said that provides a glimpse into the abyss that at the time, then Prime Minister Liz truss plan for unfunded tax cuts sent the gilt market into a tailspin.

Yields took off. They soared so quickly that the central bank had to step in to snuff out the risk of an outright financial crisis. The bond vigilantes actions forced the government to call off the plan and eventually trust got kicked out of office. Now billionaire investor Ray D’Alio has written a lot about debt cycles in his book principles for navigating big debt crises, which I have a free copy for you.

I’ll link to it in the show notes down below. Highly recommend reading it, but in this book, principles for navigating big debt crises, he talks about only four ways out of this. Number one, an outright default. Government just says we owe all the money and we’re not going to pay it back. It’s never going to happen when you have a money printer. Okay. Number two, the second way out is austerity.

Let’s just cut all the government spending and let’s live on a budget and pay off the debt. It’s probably not going to happen. Number three, they could raise taxes. The problem is, can’t really raise them too much more without civil unrest happening. And even if they raised them all the way to 100%, it’s still not enough money. And finally, the last option. Number four, which is the most likely, is they’re going to print the money.

Now, like I said, that’s my choice, but I’m sure you probably agree that’s what they’re going to choose. So now that we understand the future, the future is somewhat certain. But of course, remember, in life there’s no such thing as certainties, only probabilities. But Bloomberg gives us an 88% probability, and investing 88% of shots do not come around very often. So when they do, we have to play them hard.

But we also have to realize it’s not 100% chance, it’s just an 80% chance. So we have to manage our chips properly. So how do we do that? Well, I’m very long. Hard assets, scarce assets and energy intensive assets. What are those? Well, if you don’t know the two types of assets to buy and the one to stay away from in this market environment, then I’m going to be going through this live to help you out, showing you exactly what I’m doing.

To prepare for assets for this shift, I’m going to break down about 20 to 30. Charts show you how to build a detailed plan of exactly what to buy and how to position for this ride of inflation. It’s a free event. I’m going to stay on. I’ll answer all your questions live to make sure you know exactly how to implement these well strategies. Check out the link in the description below.

But at a high level, what the assets are is scarce assets. So first of all, scarce assets would be things that are scarce. Things that are limited, like bitcoin, rare collectibles, waterfront, beachfront property, trophy properties. Hard assets are things that just can’t be made more of. So this is gold, real estate, and then energy intensive assets are assets that require a ton of energy to produce. So be commodities should be oil, natural gas, uranium, things like that.

Even cattle. Right. They require a lot of energy. But because it’s not 100% certain, and we know from history that as the now accelerating us fiscal crisis is likely to continue to trigger episodes of severe volatility, we want to remain unlevered. Okay. It’s not 100% sure. So we want to make sure that we’re protecting our downside in our positions. But 88%, that’s what we call an asymmetric opportunity.

It’s got more upside than downside. And so when we have them, we have to play them. Now, this is a massive opportunity. It’s probably the biggest opportunity that I’ve seen in my life. So don’t screw this one up. All right? Now, if you liked the video, go ahead and give me a thumbs up on the video. If you don’t like the video, give me a thumbs down. That’s okay.

But at least tell me why in the comments down below so I can get better. Subscribe if you’re not already subscribed. And that’s what I got. All right. To your success. .

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