A prayer for the grandchildren

It’s all part of the great rhythm...the beat that goes on...and on...and on. Everything corrects. Everything regresses to the mean. From ashes to ashes...dust to dust.

US Federal Government, Total Debt. Source: US Treasury

Thursday, July 30th, 2026

Bill Bonner, from Poitou, France

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First, we are working in the dark. Figuratively most days. But today, literally. The windows and shutters are closed.

There is a ‘heat emergency’ in our area. The temperature yesterday afternoon hit 102 degrees. This may pose no threat to the lizards of Death Valley, but here almost no one has AC. Instead, old people are told to stay inside, guzzling water, so the authorities won’t have the expense of hauling them to the morgue.

This is the fourth heat wave to hit Europe this summer. People are beginning to think the planet really is heating up.

You can throw a baseball as hard as you can; more than likely, it won’t go to the moon. But how likely is it that ‘global warming’ turns out to be an accurate description of coming weather?

Let the feds have their delusional certainties. Here at BPR, we stick to guesswork and probabilities…sometimes right, sometimes wrong, always in doubt.

Meanwhile, in the stock market, the clouds gather and disperse.

Investors celebrate paper gains by buying vacation homes. Or, they hang their heads and curse the market gods. And the most up-beat IPO of all time – Space X -- turns into the biggest loser of all time, with more than $1 trillion of market value evaporated in 45 days. Pity the poor retiring investor. He should have known better.

And today, we try to ‘know better’ by looking at things that – sometime in the future -- we will wish we had known now.

The world’s biggest borrower is now in hock for nearly $40 trillion...and will never pay it back. That is almost a certainty. More likely than not, the gods will want their pound of flesh. But from whom? When?

It’s all part of the great rhythm...the beat that goes on...and on...and on. Everything corrects. Everything regresses to the mean. From ashes to ashes...dust to dust. And the dollar will go to whatever godforsaken hellhole all paper currencies end up — blowing through back alleys like plastic beer cups after a block party.

There is something consoling about it. Whatever you’re worried about, it will soon be gone. One way or another, every debt will be settled. All stocks become worthless. All empires are destroyed. And all people die.

‘He should have gotten more exercise,’ they murmur over the coffin. ‘He should have listened to his doctor.’ ‘He should have lost weight.’ ‘The poor man should never have bought SpaceX.’

But sooner or later, he was going to die anyway. As are we all.

Yesterday, we kept vigil over the tech sickbed. IBM lost 25% of its value in a single day. Google will be hit hard by its losses on SpaceX. Tesla too.

They were all bound to ‘correct’ sooner or later...now is as good a time as ever.

And how about the US empire? Is now a good time for it to regress to the mean? Donald Trump is doing a good job of leading the regression. But how do we know it is not just a huge head-fake...with the real decline not coming for many years?

Well, we don’t know. But the federales are doing all they can to bring the empire down now. And no matter what path they choose, at least in the medium term — two to ten years — they are almost sure to stumble. Yahoo! Finance:

Total federal debt stood at $39.065 trillion as of January 1, 2026, according to the Federal Reserve’s GFDEBTN series, and is on pace to cross $50 trillion before 2030. The stock has grown by roughly $16 trillion since 2020. The bigger issue is the vintage of that debt. A large share of that debt was issued when the 10-year yielded under 2%. As that paper matures, Bessent has to reissue it into a market where the 10-year yields 4.67% and the 30-year yields 5.15%. Every rollover raises the ongoing carrying cost of the national debt.

The US government has made the same ‘mistake’ as Google and Oracle — it squandered its cash. It raised nearly $40 trillion, net — borrowing it from relatives, friends, and enemies...while counterfeiting a few extra bills in the basement of the Treasury.

What did it do with the money? What ‘investment’ of public funds did it make that would repay the loans?

Let’s look at the portfolio results. The Iraq war? The Afghanistan war? All of those billions in weapons to Israel? The attack on Iran? Where’s the profit?

Or how about those half-century War on Poverty and War on Drugs programs? (Even the most recent iteration has produced no bottom-line gains. Esquire: ‘Turns out, we blew up all those boats in the Caribbean for nothing.’) Or the DEI initiatives? Or the loans to college students and grants to universities? Or the billions in funding for better medical care? Where’s the payoff?

If the rate of return on the $40 trillion were just 5%, there would be plenty of coin to pay the interest...and pay down the principal. Instead, there’s nothing. And now, the total is approaching $50 trillion by 2030, when the Feds will likely have to come up with $2.5 trillion just to cover the interest.

Where will that money come from? No uncertainty there...it has to come from somewhere. And since all those ‘investments’ they made over the last thirty years have been ruinous failures, the only way they’ll be able to pay the interest is either by cutting down on current spending...or borrowing more money. Inflate or die. There is no third way, no matter what TV quack tells you otherwise.

We’re back to probabilities. Which is more likely?

Take your time to think about it, dear reader....and about the people who will make the decision. And the context. Will voters give up Social Security and Medicare benefits to protect the fiscal virtue of the Republic...for their grandchildren’s sake? And what about the feds — Democrat or Republican...will they stand up to the big lobbies to save the dollar...or will they save their own political necks?

We don’t know for sure. But we wouldn’t bet on the dollar…and we’ll whisper a prayer for the grandchildren.

Regards,

Bill Bonner

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