Debt. We are drowning in it. If we were issuing debt to rebuild our infrastructure or fund profitable endeavors that would produce gains over time it would be one thing. The debt that the USA is drowning in is the worst type of debt that is being used to pay interest, pay to feed people, fund unending wars, and many other things that, once spent, all that is left is the increasing debt itself and the interest that gets accrued going forward.

This is just the Federal government. Many states are in a similar situation. Many companies and households are also going deeper into debt. Companies are also issuing debt to pay dividends or repurchase their own stocks- to give the illusion that the enterprise is strong. Many individuals and families are using credit to keep up the illusion of their lifestyle where wages have not kept up with rising prices.

Many cracks are showing. The $38 TRILLION that the USA admits to owing is just the beginning as unfunded liabilities and off-balance sheet items are multitudes higher. Many cities and states may have already collapsed if it weren’t for the hundreds of billions in bailout money during the CV19 lockdowns.

As I research many companies, I see many balance sheets (many household names) that actually have more DEBT than EQUITY. With a drastically slowing economy this could be a dagger for those companies. This does not bode well for future job growth or even stability for workers today. We are already seeing massive layoffs among most industries, and the numbers are rising.

In fact, the Challenger October US job cuts came in at over 153,000 and that is up 175.3% from September. This is also the highest number since 2003- even higher than 2020. Don’t worry about the “markets” though- the terrible jobs numbers increase the likelihood of a Fed rate cut in December, so the “markets” are rising (artificially) on the news. Job openings are also cratering so there is even more “good” news.

The reason that many economists are predicting large problems in 2026 is likely because of the massive layoffs and debts that are currently taking place but are being masked so far because of severance packages and unemployment insurance. There are expiration dates on both.

According to the New York Fed US household debt reached $18.5 TRILLION in the 3rd quarter of 2025- an all-time record. That is $18.5 TRILLION PLUS INTEREST in future earnings that have been pledged.

In addition, a Major crack that is showing is rising delinquencies among all forms of personal debt.

Delinquent loan percentages:

Debt Type 30 Days 90 Days

· Credit Cards 9% 7%

· Auto Loans 7.5% 5%

· Mortgage 3.8% 3%

· Home Equity 2.1% 1.5%

· Student Loans 15% 15%

Source: NY Fed Consumer Credit Panel

As we can see the student loan numbers are abysmal. Keep in mind that these payments were frozen for quite a while. As these loans fall further behind this will make it FAR harder for those in debt to get any new debt as their credit scores will start taking hits going forward. It is never a good idea to get into more debt to fix a debt problem anyway but sometimes you just need to buy time. Just ask the major banks!

I have to wonder why the banks needed to hit up the Fed’s repo facility for over $100 BILLION last week. Could it be that with the government shutting down and all of the layoffs many people are foregoing debt payments in order to live day by day? Remember 67% of all people live paycheck to paycheck. This is regardless of income. Could it be that the banks have been extending loan covenants and kicking the can down the road?

My wife’s cousin who is a major lender at a major bank when I stated that the economy was collapsing said “I am seeing it first-hand.” He said that he deals with many logistics’ companies. Most are asking for extensions and changes. I also saw information that UPS is laying off long-term employees and replacing them with gig workers at about ½ the pay and NO BENEFITS as margins are crashing. This is exactly the opposite of what I would have expected with the massive upturn in online shopping and the need for deliveries. It was also reported that FedEx has seen its margins shrinking also. Inflation is the culprit as I am sure that gas, repairs, maintenance, insurance, and salaries have gone WAY higher in the past 10 years. You can only pass so much of that along to the consumer and stay competitive.

The America I grew up in was filled with patriotic hard-working people who seemed to have a sense of purpose. Most were interested in win-win situations and working together. Today, I am seeing an America consumed with get rich quick schemes and every man for himself mentality. There doesn’t seem to be much interest in what many give back to society- only what they can take. Many people have taken the easy way out and overextended themselves as opposed to foregoing some non-essential goods and now the bill is coming due at a most inopportune time.

We are in a situation where it is obvious by looking at the numbers- even the “official” ones which are massaged to make things look far better than they actually are- MANY promises to repay will not be kept. There will be some outright defaults by all who are overindebted and can’t “print” the “money” up to pretend they can pay. For anyone who thinks this makes the debt of those who can “print money” safer you should think again. You will probably get paid back what you were promised but you may have been planning on buying a car and you may be able to afford dinner with the proceeds. For anyone who thinks this is outlandish as the folks in Weimar Germany, Venezuela, Argentina, Brazil, Zimbabwe, and many other places.

In my opinion the warning signs of our US dollar’s demise are flashing red. Less productivity, rising debts and interest payments, less ability to service the debts and also to fund current spending = Far more “money-printing” and a FAR weaker dollar.

I believe it is imperative to own hard assets and companies that produce them. At the end of the day these things are ASSETS and not someone else’s liability. Gold and silver are at the top of my list.

Remember- metals, food, water, oil and gas do not change. The rising price is a reflection of supply and demand but also the loss of purchasing power of the currency.

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct.

Commodities are generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only be a small part of a diversified portfolio. There may be sharp price fluctuations even during periods when prices are rising overall.

Precious Metals, including gold, are subject to special risks including but not limited to price may be subject to wide fluctuation, the market is relatively limited, the sources are concentrated in countries that have the potential for instability, and the market is unregulated.

Diversification does not ensure gains nor protect against loss. Companies mentioned are being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk regardless of strategy.