Consider the excellent chart below prepared by top macro analyst Luke Gromen. After a brief reprieve, the US Federal deficit is growing again, and we are looking at Federal Deficits that will approach the COVID peak soon if spending is not cut or taxes are not raised.

Debt traps have been experienced many times by emerging countries. When the Government cannot balance its budget and is forced into printing money to cover the deficit, the currency decreases or collapses in value and/or there is a default or inflation. This pattern is very predictable in smaller countries. We are about to see how it plays out in a large country that has the World’s reserve currency.