The Insolvent States of America

Sponsored by: Patriot Home Funding

Welcome to the Insolvent States of America. We're hardly the United States of America, just pull up your favorite social media platform or turn on cable news, and you'll see, but we are definitely the Insolvent States of America. Allow me to explain…

In FY 2024 the Insolvent States of America had about $15 trillion of obligations- digressionary and mandatory spending of about $7 trillion plus debt service on our ever-increasing debt at Biden interest rates of about $8 trillion. Income to the imperial federal government, the money manager of the Insolvent States of America, was about $5 trillion. That means that the Insolvent States of America had to charge the other $10 trillion, meaning issuing treasury bonds, otherwise known as additional supply in the bond market, to cover that short fall.

When entities, whether they be individuals, business, families, or governments, do not have enough income and liquid assets to pay their debts, they are insolvent. When an insolvent entity loses the ability to finance the debt because those who are lending the entities deem the risk too high to be tolerable and stops buying their debt issuance or lending the insolvent entity the funds necessary to cover the debt, the insolvent entity goes bankrupt. Being the Insolvent States of America is bad enough, but imagine if we become the Bankrupt States of America. It would literally be the worst thing other than nuclear holocaust that could happen to the world. The three leading empires in the world prior to the United States - Rome, France, and England - all collapsed fiscally before they collapsed geopolitically.

Our federal government operates a legal Ponzi scheme that issues new debt to pay off old debt, or just creates new money out of thin air. Both erode the value of your assets and create inflation. They steal from the future to fund the excesses of the present. Just look what's happened between the advent of Covid in March 2020 and now. Federal spending has increased by 52% on an annual basis since 2019, so instead of tightening our fiscal belts, the Insolvent States of America almost doubled down on the madness. We are feeling the effects of that madness now in the credit markets.

The bond market is the arbiter of the financial health of a nation. The Federal Reserve controls the short end of the credit yield curve through the discount and fed funds rates, but the buyers of the bonds- and that is other governments, businesses, financial institutions, and individuals like you and me- control the long end of the curve.

When you as an individual become insolvent, what happens to your credit score? It drops because you are too leveraged, and in order to attract additional or new financing, or continue to enjoy any revolving financing in the form of credit lines, the lender requires a greater return in the form of fees or interest, to mitigate the risk, or just pulls the plug completely.

The same thing applies to nations. When a nation's perceived credit score drops - either by lower bond ratings, or perceived risk due to rising debt and fiscal irresponsibility- the creditors, in this case those who actually buy the debt, demand a higher return. That is why interest rates have not fallen even as the Federal Reserve and Trump administration has been successful in lowering inflation nearly to the Fed's 2% target. When multiple nations, and in this case two of the three largest bond issuers in the world in the US and Japan, fail to exercise fiscal responsibility and become insolvent, it becomes a doom loop and the cost of credit for everybody increases with little hope of easing in the short term.

At least 90% of the politicians in Washington, DC have chosen insolvency- and none of them ran on it so they are all liars and thieves — because to a politician, especially a corrupt politician, the goal is to acquire, retain, and expand their political power and personal wealth, not to do their fiduciary duty to the constituents and the nation and exercise sound fiscal policy. They have chosen to inflict long-term pain on the nation, on your children and grandchildren, and the young adults of today, for the short-term gain of political power and personal wealth. It is unconscionable and every single American, regardless of political affiliation or ideology, should be united in anger and disdain- but somehow, we are not.

Whether it is by reconciliation, rescission, or by pocket rescission- as Ned Ryun explained on Wednesday's show—we need half of the house plus one, and half the senate to join President Trump to stop the bleeding of our wealth, and our children and grandchildren's futures—DOGE has shown us the way—so that somehow we don't become the Bankrupt States of America instead of the Insolvent States of America. And who knows, if enough people wake up and educate themselves, demand accountability, and demand congress actually do its fiduciary duty, we may become once again the United States of America.