The Fatal Addiction: How America’s Debt Binge Could Kill the Dollar—and Resurrect Gold

America is facing an existential threat - not from foreign armies or trade wars, but from within: an addiction to debt so powerful it may bring down the dollar, destroy traditional investment portfolios, and usher in a monetary reckoning. Gold soaring over $100 to above $3,340 per ounce on Monday continues to warn the market and the world that significant risk remains.

‍

In our latest Pinnacle Digest podcast, Michael Pento, founder of Pento Portfolio Strategies and a former advisor to U.S. Treasury Secretary William Ross, unpacks the silent crisis brewing beneath Wall Street’s optimism. With the Fed cornered and deficits ballooning, Pento believes a reckoning is coming. This is the story of America’s debt crisis - and the assets that could survive it.

America’s Debt Crisis: The Largest Bubble in History

“We are in the midst of the biggest bubble ever recorded. And it’s not just a stock market bubble or a real estate bubble—it’s a bond bubble,” warns Michael Pento. “You cannot have 150% debt-to-GDP and rising without massive consequences."

‍

As of May 2025, America’s national debt is racing toward $37 trillion. With interest rates still elevated and inflation proving sticky, the U.S. government is now spending over $1 trillion annually just to service the debt—more than its entire defense budget. According to the U.S. Treasury Department, interest on the debt now consumes 15% of total federal outlays.

‍

And the private sector isn’t much better. Corporate debt in the U.S. topped $13 trillion in Q1 2025, a record. Consumer credit card balances have also surged past $1.3 trillion, even as delinquencies rise.

"This is not capitalism," Pento explains. "This is socialism for Wall Street and austerity for Main Street."

America’s Debt Crisis: The Fed Has No Escape

‍

One of the most sobering aspects of America’s debt crisis is that the Federal Reserve is trapped. It cannot normalize policy without detonating the system it created.

"The Fed has turned into the biggest hedge fund on the planet," says Pento. "They bought trillions in assets. Now, if they keep rates high, their portfolio implodes. If they cut rates, inflation comes roaring back."

‍

The collapse of the Silicon Valley Bank and Signature Bank in 2023 was a taste of this fragility. In response, the Fed launched the Bank Term Funding Program (BTFP), injecting liquidity to stabilize markets. But that program expired in March 2024, leaving policymakers without a clear roadmap for the next emergency.

‍

Recent news like the April 2025 warning from the Congressional Budget Office — projecting $20 trillion in additional debt over the next decade — confirms what Pento fears: the path is unsustainable.

‍

America’s Debt Crisis: The 60/40 Portfolio is Dead

‍

"That 60/40 portfolio? It’s a relic," declares Pento. "Bonds are no longer a hedge when inflation and interest rates rise together."

‍

Indeed, 2022-2023 marked the worst period for the 60/40 portfolio in decades, with both stocks and bonds posting losses. In an era of mounting deficits, persistent inflation, and policy instability, the old rules of diversification are breaking down.

‍

Investors are being forced to rethink everything they know about risk, safety, and return.

‍

America’s Debt Crisis: Gold is Real Money

‍

"When confidence in fiat erodes, gold becomes money again," says Pento. "It's not a theory—it's a historical law."

‍

As central banks around the world stockpile record amounts of gold—buying more in 2022 and 2023 than in any years since the 1950s—the writing is on the wall. China, India, Russia, and even Poland are diversifying out of the dollar.

‍

"Why do you think the BRICS are buying gold and dumping Treasuries? They see what’s coming."

‍

According to the World Gold Council, central banks purchased over 1,000 tonnes of gold in both 2022 and 2023. The trend has continued in 2024 marking the third year in a row central banks bought more than 1,000 tons of gold.

‍

America’s Debt Crisis: A Coming Reset

‍

Pento believes that a deflationary bust is inevitable, followed by even more inflationary policy.

‍

"First, the bubble pops—equities collapse, real estate sinks, unemployment soars. Then the Fed panics. QE returns. Helicopter money. UBI. They’ll throw everything at the wall. That’s when gold really moves."

‍

And that’s what makes this moment so dangerous. The monetary authorities are out of ammo, and the public’s patience is wearing thin.

‍

Recent headlines like "Fed Faces Rising Pressure to Cut as Jobless Claims Spike" (Reuters, April 25, 2025) and "Global Central Banks Eye Coordinated Liquidity Push" (Bloomberg, April 20, 2025) underscore the fragility of the system.

‍

Gold Warning Investors to Prepare or Perish?

‍

Michael Pento’s warning is not hyperbole. America’s debt crisis is real, growing, and coming to a head. The Fed is trapped, the dollar is at risk, and traditional investment strategies are failing.

‍

Investors must be nimble, informed, and willing to embrace assets that have withstood the test of time. Gold isn’t just an inflation hedge—it’s a vote against monetary madness.

‍

"We’ve crossed the Rubicon," Pento concludes. "The question is not if we reset—it’s when, and what survives."

‍