Part 5/14:
The underlying issue is the U.S. government's enormous debt burden—about $33 trillion—and the expense of servicing this debt at high interest rates. Luke described a “positive feedback loop”: rising rates raise the dollar’s value, which in turn increases the debt servicing costs, leading to more borrowing and further dollar appreciation. This can result in a debt spiral, where the government and private sector struggle to meet obligations.
If the Federal Reserve attempts to control this by printing money (quantitative easing), it risks unleashing inflation akin to that of Argentina—hyperinflationary and destabilizing. Conversely, if the Fed refuses to intervene, rates could skyrocketing to levels that make debt unpayable, potentially leading to defaults or economic collapse.