The Fed's New Plan To Fix America's $39T Debt

Hinzugefügt: 2026-05-15

[00:00:00]On May 15th, 2026, the Federal Reserve Bank is going to reset and most people are not going to hear about it until they feel it in their wallet. What's happening on May 15th? The chairman at the Federal Reserve Bank is going to change and he has a new plan on how to shrink the debt crisis here in the United States. The only problem is you cannot fix the debt problem without causing some sort of pain and that's the thing that most people don't understand, but it also creates opportunity for the financially savvy. And in this video, I want to break down what might be coming that we can be better prepared not just to not hurt financially, but also to find opportunity to grow your wealth even faster. So, let's break it all down. Just so we're on the same page, the Federal Reserve Bank is the central bank here in the United States. And although they're called the Federal Reserve Bank, they're actually not a bank because you and I cannot go there to deposit money. And they're also not a reserve because they're not sitting on any cash reserves and they're actually not federal. It says so on their website. And the reason why that matters is because that means the government cannot tell the Federal Reserve Bank what to do. You might have heard in 2025 and 2026 how vocal President Trump was against the chairman at the Federal Reserve Bank because the previous and current chairman at the Federal Reserve Bank did not want to cut interest rates as fast as President Trump would have liked. Now, you might say, "Can't Trump just fire Jerome Powell, who is the current chairman at the Federal Reserve Bank?" Well, the answer is no because Jerome Powell is a chairman at the Federal Reserve Bank and they're not federal, so Trump cannot tell him what to do and he cannot fire him. But this is where things are going to change on May 15th because that's when Jerome Powell's term is going to expire and once his term expires, that's when President Trump can appoint a new chairman at the Federal Reserve Bank.

[00:01:46]And the only reason he could do that is because Jerome Powell's term is expiring and that's why on May 15th, a guy by the name of Kevin Warsh is supposed to be the new lead, the new chairman at the Federal Reserve Bank and he has a very different agenda than Jerome Powell.

[00:02:00]Now, the reason why this is so important is because the Federal Reserve Bank controls the strongest currency in the world. The Federal Reserve Bank is in charge of controlling the United States dollar and the United States economy.

[00:02:12]And so when you have a new chairman at the Federal Reserve Bank, it could change the trajectory of the economy, the value of a dollar, and inflation.

[00:02:19]And Kevin Warsh is coming into the Federal Reserve Bank at a very important time because right now the United States government has over 39 trillion dollars of national debt, which is a problem.

[00:02:32]But the even bigger problem is the payments on this debt because the United States government has one form of revenue. And that revenue comes from tax dollars from taxpayers. And the fastest growing expense for the United States government is not the military, it's not infrastructure, it's not research and development. It is interest payments.

[00:02:56]Because now we are paying more than 1 trillion [clears throat] dollars a year just on interest payments on this debt. And that means more and more of your tax dollars are being used not to provide you a service, not to benefit you, not to benefit your kids, but to just pay back previous expenses plus interest. Now, before I get into the plan to try to erase the national debt, the other thing that I want you to be aware of is that when the Federal Reserve Bank makes a decision, whether it's to cut or raise interest rates, whether it's to print money, it has to be a majority vote decision at the Federal Reserve Bank. And there are 12 members that are voting inside of the Federal Reserve Bank. So right now Jerome Powell is doing things that President Trump at the government does not want. And now President Trump is working to replace Jerome Powell with somebody who will do what President Trump wants, which is Kevin Warsh, which is one more vote in favor of trying to do the things that President Trump wants, which are lower interest rates and potentially more money printing to stimulate the economy. Yes, there are consequences to that, which is inflation, but that's what President Trump wants. This is where many people wrongly think that the way the government is going to solve this debt crisis is by paying off the debt. That's not what we've seen throughout history.

[00:04:14]Because while history doesn't exactly repeat itself, it does rhyme. Let me show you how the government has tried to make their debt problems go away without paying off the debt and in fact doing the opposite by taking a look at what we've seen happen in the United States in history that will be can better predict what might be coming in the future. Keeping up with the economy is not an easy thing to do. And then when you have all these crazy things happening, it makes it so much more difficult not to get caught up in the political mess, and that's why I created Market Briefs. It is a free newsletter for investors that breaks down what's happening in the economy without all the politics and without all the fluff. It's a quick 5-minute read. We break down what's happening in things like the economy, housing market, stock market, crypto market, and global economy into a fun, witty, and easy to read newsletter.

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[00:05:25]>> [clears throat] >> See, the United States doesn't try to pay off their debt. They try to inflate their debt away. Let me show you what we did in the past. In the 1940s, after the Great Depression, after World War II, national debt in the United States exploded and it created a debt crisis.

[00:05:40]And the way the United States solved this debt crisis was not paying off the debt, it was by doing something called financial repression. To keep this as simple as possible, I'm going to start by showing you the numbers. That way you can see the impact of financial repression, and then I'll tell you how the government actually did this financial repression. In 1946, after the national debt exploded from the Great Depression and World War II, we had $271 billion of national debt, while our economy, which is measured through a number called GDP, was $222 billion large, which means we had a debt-to-GDP ratio of 106 percent.

[00:06:16]We had more national debt than the size of our economy, and this was the beginning of the financial repression in the United States, because this was a problem. We had so much debt that we had more debt than the size of our economy.

[00:06:27]Now, fast-forward a few decades and look at what happened next. The national debt went up, not down. The national debt went up to around $475 billion, while the GDP grew even faster. The economy grew to 1.55 trillion dollars in 1974, which means that the debt-to-GDP ratio now fell to about 25% and I'm rounding here, which means yes, the national debt went up, but the economy grew even faster, and so this debt-to-GDP ratio looks a lot more manageable. Now, take a look at where we were back in 2025. In 2025, our national debt hit right around $38 trillion, while our economy was about $30 trillion large, which means yes, our national debt exploded, but our economy didn't grow as fast, because now in 2025, our debt-to-GDP ratio grew to something like 125%.

[00:07:22]This is why people are concerned about the debt crisis, because it's even worse in 2025 and 2026 than it was in 1946 when we had this debt crisis. And now the question on everybody's mind is what's going to be coming next. Are we going to see a financial repression like we saw happen after the 1940s to bring this debt-to-GDP ratio number down. Now, I want to talk about what this financial repression was, but the reason why this debt to GDP number matters is because think of it like the economy, the GDP is the collateral. If you wanted to buy a $500,000 house, most banks are not going to give you a $500,000 loan today.

[00:07:58]They're going to ask you to put 5% down, 20% down. And that down payment is your equity.

[00:08:04]But if the house value goes up, well, now you can take out more cash. So, this GDP is the collateral, the debt is the debt, and when you have more debt than collateral, that's when you can start to see the problem. That's where the discussions about this financial repression come in. So, how did it actually play out in the '40s, '50s, '60s, and into the '70s? The goal of a financial repression is two things.

[00:08:26]Number one is to make the government richer by making savers poorer. Let me show you how that works. It's a two-pronged approach between the Federal Reserve Bank and the government where they kind of work hand-in-hand. The first thing that the Federal Reserve Bank does is they have to keep interest rates artificially low. And when I say artificially low, that means that they keep interest rates at a level that's lower than inflation. That's the first key factor. And then the second thing that happens is that the government kind of forces you to buy bonds at very low interest rates. Let me explain what that means. During this time in the late 1940s, the Federal Reserve Bank cut interest rates close to 0% while inflation was high. So, after World War II ended, we had an inflation problem here in the United States where inflation was at 5%, 6%, 7%, sometimes even close to 10%.

[00:09:21]And now you know how inflation works. If the prices of things are growing by 5 to 10%, your savings, your cash has to grow by more than that in order for your savings to maintain its value.

[00:09:33]And this is where a couple interesting things happened. The Federal Reserve Bank during that time set very low interest rates. They were almost at 0%.

[00:09:41]Well, what does that mean? That means if you're going to save your money in a bank, you're going to earn almost nothing in a bank. Well, if you earn 1% in a bank and inflation is 5%, you're losing a lot of value. So, why would anybody want to do that? If you enjoyed this clip and you want to continue your financial education journey, I have another video that I think you'll love.

[00:10:00]All you got to do is click that button right over there. And for those of you who want to stay up-to-date on the top finance and business news, you can join Market Briefs, my free financial newsletter, by clicking that button below. Thank you for watching and I'll see you in the next one.