Ronald Reagan once famously said he didn’t leave the Democratic Party—it left him.

That was back in the early 1960s, when the America he knew was beginning to transform.

Fiscal responsibility, which had been a cultural and political norm through the post-war 1950s, gave way to the reckless spending of US President Lyndon Johnson’s welfare programs (dubbed “the Great Society”) coupled with the Vietnam War.

Reagan was just an actor. But he decided to go into politics to address this spending and debt problem.

As governor of California and later as President, Reagan made it his mission to rein in spending and cut government down to size.

At the time, America’s debt-to-GDP ratio was much lower than today’s astronomical levels. But interest rates were sky-high, which made the cost of servicing that debt a real issue.

More concerning was the trajectory. Reagan knew that without deliberate effort to reduce spending, the deficit would eventually spiral into a crisis.

Reagan’s ethos carried through the next two decades. Even Bill Clinton picked up the baton and eventually presided over multiple years of balanced budgets.

But all that changed with the “War on Terror” in the early 2000s. The military spending blowout, combined with the 2008 global financial crisis and big bank bailouts sent the national debt on a vertical trajectory.

It blew past $10 trillion, then $15 trillion, then $20 trillion with nary a concern.

The political and media establishment dismissed it.

“Debt doesn’t matter,” they said. “We’re the superpower. We’re America.”

Yet the veneer of strength and credibility eroded, withering away bit-by-bit as deficits ballooned and the national debt climbed relentlessly.

Then COVID happened. And whatever was left of fiscal sanity died quicker than nursing home patients under Cuomo’s Emmy-award-winning leadership.

Under the influence of Lord Protector Fauci, Congress was convinced that the only way out of the pandemic was to spend trillions of dollars.

The nation debt shot up $7.5 trillion in three years. But even when the pandemic was over, the spending binge never stopped.

The national debt is now north of $38 trillion, and interest costs exceed $1.2 trillion per year— nearly a quarter of all federal tax revenue.

The other three quarters of tax revenue is consumed entirely by mandatory entitlement programs like Social Security and welfare.

This means that everything else— from the military, to roads, to the bureaucracy in DC— is paid for with borrowed money.

And let’s not forget: a significant chunk of this debt is owed to foreign nations.

Here’s the key part that makes 2025 stand out: foreign governments and central banks are starting to back away from US government bonds.

For decades, the US had a captive audience. Foreigners needed to hold dollars to participate in the global economy. And US Treasuries were the most liquid, “risk-free” assets on Earth.

But this year that illusion finally broke.

The signs were already there at the start of the year. The Biden administration’s overuse of sanctions made it clear: if a foreign country crosses Washington, that nation’s assets can be frozen and its economy sanctioned.

US government bonds no longer looked like a safe harbor. And in 2025, foreign countries began diversifying aggressively.

The clearest sign of this trend has been this year’s astronomical rise in the price of gold.

Central banks and foreign governments are dumping dollars and buying gold to prepare for a post-dollar world.

And the chaos that 2025 brought only strengthened this resolve.

“Liberation Day” tariffs rocked global trade. Then came the government shutdown.

And perhaps the most symbolic moment of the year: the DC establishment ran Elon Musk out of town—the one guy actually trying to reduce the deficit by identifying low hanging fraud and waste to cut.

That’s why 2025 will go down as the year the debt crisis got real. It was a golden opportunity to turn the tide. They didn’t even have to eliminate the deficit— just shrink it enough so that the economy could grow faster than the national debt.

But that didn’t happen.

Meanwhile, the Federal Reserve capitulated and continued to lower interest rates even as inflation ticked back up. They signaled an early end to quantitative tightening, and then set the table for more money printing.

Ten years from now, when people wonder what happened to the US dollar, they’ll be able to draw a straight line to the events that transpired this year.

Not just because of one event, but because of the cascade of decisions—economic, political, cultural—that revealed, once and for all, the unseriousness of the United States Congress and the recklessness of its monetary path.

We talk more about this in today’s podcast.

And we also discuss two other major events of 2025 which we identified as the most consequential— trends that will unfold in the future that we can directly link in a straight line to something that happened in 2025.

You can listen here.

You can also access the podcast transcript here.

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