Cash is King, but the Bond Market has the power to topple the King.

Mounting U.S. debt threatens the dollar’s reserve currency status - a cautionary lesson from history for the United States and every CXO.

The United States' debt-to-GDP ratio has surpassed 100% and is set to increase by another 15% over the next 12 months.

When demand for US Treasury bonds diminishes, it will dramatically reshape the world order beyond our wildest imagination. We are not ready for it.

What history teaches us

After losing World War I, Germany was required by the Treaty of Versailles to pay reparations in gold or foreign currency.

The solution was simple, or so they thought.

The government stopped backing its currency (the Papiermark) with gold and instead issued bonds.

Rather than raising taxes to cover wartime costs, they borrowed from the public—and increasingly from the Reichsbank. The central bank printed money on an industrial scale: 133 printing works with 1,783 machines.

When you are spending more money than you are earning (fiscal deficit), the story never ends well. With so much money being printed, the mark started to lose value dramatically.

Predictably, hyperinflation followed.

Workers, once paid monthly, were now paid twice daily in stacks of banknotes. Trucks carrying baskets of cash rolled out each morning, delivering bundles to factory workers. They were given 30 minutes off to spend the money before it became worthless.

The exchange rate went from 4.2 marks per US dollar to 640 billion marks per dollar by November 1923.

1. A simple one-way streetcar ride in Berlin: 15 billion marks
2. One kilogram of butter: 250 billion marks
3. A loaf of bread: 250 million marks

This situation allegedly led to a mental disorder called "Zero Stroke" - people were dizzied by the amount of zeros involved, so they ended up compulsively writing strings of zeros.

The economic collapse fuelled inequality, social unrest, and the rise of the Nazi Party.

Why this matters today

Even if history doesn’t repeat itself, it often rhymes. The bond market may not wear a crown, but it holds the power to dethrone kings.

Global stability rests on the foundation of the United States’ economic strength, military dominance, cultural influence, and spirit of innovation.

We must not ignore the early warning signs—the consequences for the global order could be far-reaching.

I recommend reading “Lords of Finance: The Bankers Who Broke the World” by Liaquat Ahamed.

Views are personal and should not be considered investment advice.

Read all my “Notes to Self” at view all blogs.