Once understood, we mathematically realize that our problems are not in the future, they are right now.

The 1970s

Ah, the 1970s. It was an era of bellbottom jeans, checkered suits, wide ties, the music of ABBA and Saturday morning cartoons.

It was also the decade in which Nixon decoupled the dollar and ended the sound money hopes of America's founding fathers.

Backed by nothing but "full faith and credit," the USD began its slow but steady death by a thousand cuts of borrow and spend without limit or concern.

Free a golden chaperone, politicians and Fed Chairs of every political stripe could expand balance sheets and the M2 money supply with almost zero concern for the longer-term financial karma that always follows a bacchanalian debt spree paid for with dollars literally created out of thin air.

Government debt, at $238B in 1971, was no big deal to our so-called "experts."

Besides, any future debts could be easily paid at this dawn of generational fantasy, which Hemingway described as the "temporary prosperity" of excess money printing masquerading as careful policy.

A Time Without Foresight (or Restraint)

In short, no one in the 1970's was thinking of what it might be like by 2026 when that same government debt had skyrocketed from a couple hundred billion to over $40T.

Instead, post-1971 leadership, red or blue, focused on the next election cycle rather than the next generation's purchasing power.

As holder of the world reserve currency, DC enjoyed what the French Finance Minister of 1965 described as the "exorbitant privilege" of simply exporting its reserve currency and inflation to the rest of the world.

This may have been inherently unfair to the rest of that world, but as our then Treasury Secretary, John Connally, famously quipped: "It's our currency but your problem."

Buying Time with Funky Policies

To insure that "problem," we effectively forced OPEC to sell its oil in USD, and even made the producers of this oil spend large chunks of their revenues on our USTs. This made oil a critical sponge to absorb our reckless and inflationary spending.

As Mel Brooks would say, it sure was "good to be the king" - or at least King Dollar.

And just in case a rising gold price might otherwise embarrass our nothing-backed dollar, we also made sure in the mid-70s to create a price-fixing mechanism at the COMEX to legally manipulate the paper price of this far more precious and honest metal.