David Friedberg: The Hidden Debt Crisis That Could Tank the Dollar

If the Democrats win the midterms and you end up with a Democrat in the White House in 2028, I think that there's a bigger problem at foot, which is all of the state and local obligations. We've talked about Social Security looks like it's going to run out of money in a few years here. And there's a similar problem at the state and local level. you'll very likely see a federalization of that obligation, meaning that the federal government will step in to bail out or support those state and local governments because otherwise there's going to be a real kind of economic crisis a foot. So when you add that liability coming to hit this CBO report, which doesn't include any of that in the

next 5 to 10 years, I think that could be not just the straw that they breaks the camel's back, but the concrete that breaks the camel's back. And that's the thing I'm most worried about. There is a deep connection between what's going on with the socialist movements at a city level and now increasingly at a state level and what we should expect to happen with the US dollar and how it relates to federal spending and federal deficits and federal debt. And these are going to be dragging each other into a bad place in the next couple of years one way or the other. If it's very hard to cut spending or get Congress to approve budget cuts that we need to save

ourselves from this debt death spiral, imagine how much worse it's going to be in the next couple of years if we have to bail out or federalize state and local uh debt and state and local pension obligations. It's going to be really nasty. If we can find a way to declare bankruptcy to restructure the the fiscal obligations or the the pension obligations that sit at the state and local level, we may have a way out. But short of that, uh that's going to pile onto this uh this federal