How To Crash The Economy

How To Crash The Economy

The simple formula for crashing the economy is to shrink the monetary base (cash in circulation plus reserves) while raising interest rates.

The chart below plots the monetary base (down 15% year-over-year) against the 10-year Treasury yield (up from 1.56% to 3.98% over the past year).


We are all but guaranteed a deep recession should the monetary base continue to shrink as yields remain elevated, especially given our large public debt load ($31 Trillion) which must be rolled over at significantly higher rates (see our recent article The Looming Treasury Debt Bomb).

Public Debt to GDP sits at approximately 120% thanks to the money printing party we have had since 2009 between multiple QE rounds plus the fiscal “stimulus” of 2020 and 2021 plus other Dollar-dilutive, debt-funded fiscal spending programs including the recent “inflation reduction act”.

Public Debt to GDP. Source: