Actionable insights straight to your inbox

Equities logo

Ever Wonder Why the Sandwich That Costs $10 Now Was Only $7 Five Years Ago?

This chart scares me, and it should scare you too.

Image Source:

This chart scares me, and it should scare you too. It shows the national debt as a percentage of the Gross Domestic Product. In 1975 it was 33%. Now it’s over 100%. This is scary because it will eventually cause massive inflation. This is a result of the government creating new money because it is not able to cover its costs.

Let’s talk about how this works. If the government prints money, it causes inflation because when there is more money chasing the same amount of goods in an economy, prices will inevitably rise.

For example, if there is just $10 in an economy and just one product then the product will cost $10. If the government prints another $10 there is now $20 in the economy, so that same product will now cost $20. That is how inflation happens.

If the USA was a company, we would have declared bankruptcy decades ago. Eventually, something is going give and it won’t be pretty.

A weekly five-point roundup of critical events in the energy transition and the implications of climate change for business and finance.