We are heading toward an increasingly inflationary world

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Our current system cannot continue forever and will ultimately lead to a crisis and failure. Market distortions are growing more pronounced, and the timeline for this impending upheaval is rapidly contracting. Applying the Fourth Turning model,¹ we can estimate that a resolution to this crisis will likely manifest between 2028 and 2033. Historically, these periods of significant, tumultuous change tend to last between 15 and 25 years, maybe 20 on average. I mark the beginning of this Fourth Turning in 2008, coinciding with the eruption of the global financial crisis. If we apply the model to this assumption, the resolution will occur between 2023 and 2033. We’ve already passed the 2023 mark. But, if we follow the average timeline, a resolution should arrive around 2028. I doubt this turning will last a full 25 years, but if it did, that would suggest a resolution by 2033.

Here is how I see things playing out. (This is not financial advice, just my best guess.) Given the inherent instability of fiat money, we are living through an era of recurring financial bubbles. From the Dotcom bubble to the housing bubble and now to the all-encompassing “Everything Bubble,” each successive bubble has grown more pervasive and far-reaching than its predecessor. The current bubble – fueled by money printing, shockingly low interest

rates, and ballooning government deficits – has led to artificially inflated asset prices across the spectrum. There is no level above this bubble. As it bursts, the very credibility and value of the sovereign currency will evaporate with it.

Ensnared in a debt spiral

Governments have overextended themselves, issuing paper claims to wealth that can never be honored in real terms. If these commitments are met, it will require excessive money printing, which will inevitably devalue the currency and ultimately lead to its collapse. How will this scenario play out? The market for U.S. government debt is likely to be the first domino to topple, as investors recognize that the government’s dependence on money printing is unsustainable and inflation poses an existential threat to their wealth. Ceteris paribus, as interest rates climb due to increased bond sales and waning demand, the U.S. government will find itself ensnared in a debt spiral, with escalating interest expenses driving larger deficits and necessitating the sale of even more bonds. This is the debt spiral or the debt doom loop – a vicious doom loop, which is neither new, nor unusual. Numerous countries have experienced this, some repeatedly. Typically, debt doom loops have occurred in smaller countries like Zimbabwe, Venezuela, and Sudan, which find themselves trapped in economic collapse. Occasionally, however, much larger countries succumb to the debt vortex. See: Weimar Germany 1921-1923, Russia 1917-1924, China 1946-1948, and Brazil 1989-1994.

«Governments have overextended themselves, issuing paper claims to wealth that can never be honored in real terms.»

Authorities who run the monetary system are keenly aware of the debt doom loop and may attempt to implement financial repression or yield curve control (YCC) to prevent it. If rising interest rates are the underlying problem, the Fed and/or Treasury may implement YCC to set an upper limit on government debt interest rates. They do this by purchasing debt in the open market with newly printed money, thereby expanding their balance sheet (also known as quantitative easing). In the next crisis, I believe the Yield curve control is when a nation’s central bank purchases its government bonds to support their price and prevent interest rates from going higher. The bonds are purchased with newly printed money, and the process is very inflationary. The last time yield curve control was used in the U.S. was to finance World War II.

Federal Reserve’s balance sheet, currently at $7.2 trillion, could expand to $25 trillion or even more. Such an astronomical increase would not only inflate the Fed’s balance sheet but also risk further erosion in confidence of the sovereign creditor’s creditworthiness. This confidence is a very important issue. If the U.S. were to fully adopt policies advocated by Modern Monetary Theory proponents, it could trigger a loss of trust in the nation’s credit. Such a scenario could result in the entire U.S. Treasury Bond market slamming the gavel, nodding to the Fed, and saying, “Sold to you.” With over $36 trillion of sovereign debt, the Fed’s balance sheet could balloon to over $42 trillion, compounding the financial instability. If the Fed is forced to buy all outstanding U.S. debt, the base money supply will more than double again, causing devastating inflation.

Painful one-time reset

We’re in a financial bind, and it’s a serious one. We’ve accumulated an enormous amount of debt that’s virtually impossible to pay back in real terms. More than that, we’ve made more promises than we can realistically keep, and now it’s time to face the consequences. The harsh reality is that our debt is not “money good,” at least not in terms of real purchasing power. We could attempt to service it by printing more dollars, but that would only lead to rampant inflation and further economic turmoil. Alternatively, we could default on our commitments, but that would result in political chaos and a severe economic depression, with widespread unfairness and hardship.

Confronted with the specter of either crippling inflation or a depression that could rival the Great Depression, policymakers may look to a third option: a monetary reset. A monetary reset is somewhat akin to a debt jubilee. Rooted in ancient Mesopotamia and Biblical tradition, debts were forgiven or canceled on a large scale every 50 years. Monetary resets are modern, watered-down versions of this. In the 1930s, President Roosevelt tapped into a form of monetary reset by devaluing the dollar against gold to combat the Great Depression. Today we find ourselves in a similar situation. The dollar is significantly overvalued, and we’ve made far too many promises that we can’t possibly fulfill. Someone will inevitably lose when these commitments are marked-to-market; that’s an unavoidable reality. However, if this process leads to the reinstatement of a sound monetary unit, then the pain would be a one-time event rather than years or decades of chaotic inflation/depression.

«The dollar is significantly overvalued, and we’ve made far too many promises that we can’t possibly fulfill. Someone will inevitably lose when these commitments are marked-to-market.»

Here is the thing. We are heading toward an increasingly inflationary world that could, if mismanaged, devolve into hyperinflation. History has shown us that hyperinflations are incredibly chaotic and destructive, leaving people and societies in ruins. That is the bad news. The good news is that when these same societies return to a sound money standard, they heal very quickly. The money is broken. We need to fix it. The process will hurt. So why not do it in a quick, structured way with the promise of a bright future based upon sound money principles?

This text is an excerpt of «The Big Print: What Happened To America And How Sound Money Will Fix It» (Amazon, 2025).