The Dow Jones… the US dollar… Bitcoin… Ripple…
They have each surged higher over the past month. Something’s going on here…
We wouldn’t expect these four assets to be correlated with one another. Never before have they each benefitted from the same trend.
Now, it would be one thing if these four assets just happened to perform well on the same day – showing small gains. But that’s not what we’re talking about. Here are their gains over the past 30 days:
- Dow Jones Industrial Average: +6.6%
- US Dollar Index (DXY): +2.8%
- Bitcoin (BTC): +43.8%
- Ripple (XRP): +361%
These are massive moves for each asset over a one-month time period… and that’s never happened before for each of them at the same time.
Historically, it’s not uncommon for the Dow and the US Dollar Index to rise in tandem. But typically we would expect Bitcoin and Ripple to fall when those two rise.
There’s been a consistent inverse correlation between Bitcoin (and other cryptocurrencies) and the US Dollar Index up to this point. Yet here we have the Dow, the USD Index, Bitcoin, and Ripple surging together. What gives?
I’ll submit to you that the markets are pricing in a massive recapitalization of the United States… with these four assets each playing a crucial role in that process. Here’s what I mean…
It’s more common to talk about recapitalization in terms of a business – but the same concept can apply to a country.
What we’re talking about is a significant restructuring of America’s financial and economic framework. It’s all about stabilizing the capital structure. This must be done on the following levels:
- Government Debt and Fiscal Health
- Economic Revitalization
- US Dollar Stability
Let’s start at the top…
The US government’s debt level has become unsustainable. Its interest expense topped $1.1 trillion this fiscal year – making interest payments the second line item on the federal budget.
To illustrate how extreme this is, let’s look at the largest federal expenses for fiscal year 2024:
- Social Security: $1.5 trillion
- Interest Payments: $1.1 trillion
- Medicare: $869 billion
- Defense: $826 billion
At the same time, $16.8 trillion in federal debt is coming due over the next four years. There’s no money to pay this debt off… so it can only be “rolled forward” by issuing new debt in the form of Treasury securities.
But why would anyone buy this new debt? The current trajectory shows very clearly that the US government is on the path toward a self-reinforcing debt spiral.
That’s where recapitalization comes in.
In order to make its new debt attractive, the federal government needs to cut spending dramatically – to demonstrate fiscal responsibility for the first time in decades.
I suspect we’re all aware of the new Department of Government Efficiency (DOGE) – to be led by Elon Musk and Vivek Ramaswamy. They’ve vowed to balance the budget by cutting nearly $2 trillion in federal spending. But are they serious?
I appreciate the sentiment, but I was a little skeptical at first. Then I listened to Tucker Carlson’s interview with Russel Vought—soon-to-be Director of the Office of Management and Budget (OMB)… and I’m sold.
Vought convinced me that he is a true believer. He genuinely believes that we must balance the budget now if we want to save the country. What’s more, they have a comprehensive plan for doing so.
That’s the first step in America’s recapitalization – the government’s debt must be shored up and its fiscal health must be restored.
We’ll hit the other steps tomorrow… and then we’ll talk about how the Dow, the US dollar, Bitcoin, and Ripple fit into the picture.
-Joe Withrow
P.S. I never thought I’d say this, but the stage it set for a renewed phase of American prosperity. The pieces of the puzzle still have to come together… but I’m more optimistic than I’ve been in a long time.
The simple fact is that the American middle class has been hollowed out and inflation has made it very difficult for regular folks to get ahead. There’s a decent chance these trends will be reversed in the coming years – but it won’t happen immediately.
America’s Great Reorganization will require the liquidation of more than a decade’s worth of malinvestment… which won’t be a smooth process. Still, we can each implement a strategic investment plan at the personal level to put us on the right side of history’s march… and make our finances bulletproof forever.
To learn more about building a personalized investment plan, go here: https://phoenician-league.lpages.co/finance-for-freedom-short/