Skip to main
Todd Carlisle avatar
Todd Carlisle
@tcardizzle
•
You're going to be hearing these two words a LOT over the next 5-7 months: Debt Ceiling. I'm sure a million people with agendas will be more than happy to tell you why they think defaulting is a fantastic idea. I spent a lot of time last year trying to explain why the debt ceiling needed to be raised and what the consequences would be if we didn't raise it and basically all I got in the comments were a bunch of political talking points and nonsense. So if you want to know about the debt ceiling I have some links below. This post isn't going to be about what the debt ceiling is or why you should care. This post is going to be about how to make money from political dysfunction and potentially protect yourself and your family from financial ruin. If you want to instead turn this into a political debate about spending and blah blah blah go to Twitter, I hear Elon saved free speech. This is a post that everyone should pay attention to regardless of who you voted for or what your opinion of the national debt is. I'm beginning with the assumption that we either actually default or we get so close to defaulting that, like in 2011, the credit rating of the country is lowered. What would be some immediate consequences if the United States failed to pay it's debt obligations? 1) US Treasuries would sell off rapidly leading to a spike in yields. 2) The value of the US Dollar would plummet 3) Cryptocurrency would drop by a huge amount Don't worry, I'm going to explain why and how you can profit from this nightmare or at least protect yourself as much as possible. First, let's talk about why Treasuries would sell off and how you can profit from this. US Treasuries (bills, notes, bonds) are US debt. Any time Congress passes spending bills that exceed national revenue the US Treasury Department is authorized to sell Treasuries to pay for this spending. These Treasuries are basically loans to the US government with the promise of an interest rate payment to whoever holds it. The reliability of the US government to pay this debt plus interest has resulted in Treasuries being referred to as "risk free." That means while companies or other nations might default on their debt, the United States never has and that reputation carries with it the benefit of being the reserve currency of the world. So imagine you just lent a friend $100 and they promised to pay you back $110 in a year. You're getting $10 "interest" as well as the $100 principle investment back. But say a few months in you start hearing that friend telling people they have no intention of paying you back anything. You can either keep hoping and waiting or you can start looking to sell off that debt to someone willing to buy it from you. You find someone who's willing to pay you $80 for that $110 debt. You can sell it to them taking a small loss or you can risk losing everything if they decide not to pay you anything back like they've been saying. Well.. a LOT of people are going to take the loss and sell that debt off to avoid a complete loss. That's what we're looking at right now. The debt ceiling will be reached tomorrow according to Treasury Secretary Yellen. Treasury will then engage in "extraordinary measures" which is basically selective bill payment allowing us to continue meeting our debt obligations for several more months. Estimates say that in June these "extraordinary measures" will be exhausted and we will start missing debt payments. So what will people who are holding US debt do when June gets closer and closer without any resolution? They'll start selling off this debt to someone else willing to take the risk likely for a loss. That means US Treasuries will drop in value SHARPLY the closer we get to June. Luckily for you there's a few funds that profit as the value of Treasuries drops. $TMV is a 3x leveraged fund that gains as 20 year dated US Treasuries fall. My top gaining symbol last year was TMV which went up as the Fed shifted policy. It only has a few specific use cases and this is one of them. The next issue is the falling value of the US Dollar. Due to the Federal reserve being the most aggressive and soonest to act raising rates to combat inflation last year, the US dollar hit multi-decade highs. Investors were lured by the rising rates which would provide enhanced returns on cash as well as the perceived "safety" of the dollar. Put plainly people trusted the US Dollar because of our history of successfully navigating chaos. As Congress verbally toys with the idea of us not paying our debt obligations this trust will be eroded. People will pull their money out of dollar denominated investments and begin to look for other "safe havens." We can already see $GLD and $SLV beginning to reverse their multi year decline and we can see the dollar dropping $UUP . So how can you protect yourself? Well, you can short the dollar through $UDN or buy into physical Gold or Silver. Another strong recommendation is to consider converting some money into another currency. If nothing happens, we pay our debt, and everything goes back to normal you can simply convert it back to dollars and you'll lose almost nothing. If we default and the value of the dollar collapses, you can convert the foreign currency back to dollars at the new exchange rate which will likely provide you with significantly more dollars than you originally converted or you can hold the foreign currency (although that makes it difficult to spend here). My research indicates that the Swiss Franc CHF has a negative correlation with the US Dollar. It is also historically considered a "safe haven" currency. Brokers that offer Forex trading will have the ability to convert to foreign currency. I've also got a link below on other ways to convert. Finally, because I know the faithful are out there saying "well just buy cryptocurrencies!!" You should know that's a TERRIBLE idea. USDT (Tether) is a HUGE part of the crypto ecosystem. They might be the best run scam in human history. That debate is for another day, but it's important to know the role Tether plays in the entire crypto universe. It ROUTINELY has the highest overall trade volume daily and has a market cap of over $60 billion. Well, according to Tether their currency is backed by over $39 billion in US Treasuries. Tether says it holds $39.7 billion in U.S. Treasury Bills | Reuters https://www.reuters.com/technology/tether-says-it-holds-397-billion-us-treasury-bills-2022-11-10/ So as we get closer and closer to the US defaulting on their debt we'll start to see people pulling money out of areas that are heavily exposed to US Treasuries. At an over 50% exposure, USDT is a nightmare and will sell off fiercely. As we've seen from FTT, $LUNA , TERRA and on and on, when massive crypto selloffs occur, $BTC follows suit. So if you think crypto is a safe haven you really need to reevaluate that. I'm not interested in having a debate about why you think we should be allowed to default or whatever. People are going to believe what their echo chamber is telling them to believe for the most part. The purpose of this post is to look at ways that we can all protect ourselves from this potential catastrophe. To summarize you can 1) Short US Treasuries through funds like TMV or using put options on $TLT 2) You can short the US Dollar through $UDN or put options on $UUP 3) You can buy physical metals like Gold and Silver 4) You can convert some US Dollars to a foreign currency (I suggested CHF but you do the research to find the safest option) 5) You should stay away from cryptocurrencies due to their exposure to US Treasuries It is important to mention that several of these suggestions still result in extreme exposure to the dollar. So TMV or UDN gaining a ton really isn't extremely helpful if the dollar collapses. You'll simply have more of a vastly devalued currency. So it's important that those moves be used in the run up to a potential default, but that you exit those positions before an actual default and convert that money into another currency and/or precious metals. I've provided a lot of links below for further reading. Please, please, please spare us your political manifesto in the comments. If you have suggestions for other ways to hedge against this looming catastrophe please share. If you have questions about the methods I've mentioned, please ask in the comments. But again, let's keep this focused on ways everyone can protect themselves from the potential fallout of this. If you found this post helpful please share and join my Discord community! https://discord.gg/GaUxA4dvZs ///// https://www.investopedia.com/terms/d/debt-ceiling.asp //// https://www.investopedia.com/dec-3-2021-debt-ceiling-deadline-looms-5211014 ///// https://www.investopedia.com/articles/investing/052915/how-invest-swiss-franc.asp /////// https://www.investopedia.com/trading/using-currency-correlations-advantage/ /////// https://www.investopedia.com/terms/1/2011-debt-ceiling-crisis.asp /////// https://cepr.org/voxeu/columns/cost-political-uncertainty-lessons-2011-us-debt-ceiling-crisis ////// https://www.investopedia.com/ask/answers/08/how-to-convert-currencies.asp //// Additional short Treasury Funds https://etfdb.com/themes/inverse-short-government-bond-etfs/ //// #tcardizzle #trilliondollarcoin #debtceiling #mintthecoin
Oct 18, 2022 - Jan 18, 2023
TMV
TMV26.11%
UDN
UDN9.91%
SLV
SLV28.56%
GLD
GLD15.75%
172
0
Own your future.
Build your portfolio.

Invest in everything on Public

Public is an all-in-one investing platform where you can build a multi-asset portfolio that includes everything from stocks and options to bonds, crypto, and a High-Yield Cash Account.
Sign Up
Contact Us
Check the background of this firm on FINRA’s BrokerCheck.
Open to the Public Investing, Inc. Customer Relationship Summary

© Copyright 2024 Public Holdings, Inc. All Rights Reserved.

Market data powered by Xignite.

All investments involve the risk of loss and the past performance of a security or a financial product does not guarantee future results or returns. You should consult your legal, tax, or financial advisors before making any financial decisions. This material is not intended as a recommendation, offer, or solicitation to purchase or sell securities, open a brokerage account, or engage in any investment strategy.

Stocks, ETFs, Options, Bonds.
Self-directed brokerage accounts and brokerage services for US-listed, registered securities, options, and Bonds, except for treasury securities offered through Jiko Securities, Inc., are offered to self-directed customers by Open to the Public Investing, Inc. (“Public Investing”), a registered broker-dealer and member of FINRA & SIPC. Additional information about your broker can be found by clicking here. Public Investing is a wholly-owned subsidiary of Public Holdings, Inc. (“Public Holdings”). This is not an offer, solicitation of an offer, or advice to buy or sell securities or open a brokerage account in any jurisdiction where Public Investing is not registered. Securities products offered by Public Investing are not FDIC insured. Apex Clearing Corporation, our clearing firm, has additional insurance coverage in excess of the regular SIPC limits. Additional information can be found here.

Options.
Certain requirements must be met in order to trade options. Options can be risky and are not suitable for all investors. Options transactions are often complex, and investors can rapidly lose the entire amount of their investment or more in a short period of time. Investors should consider their investment objectives and risks carefully before investing in options. Refer to the Characteristics and Risks of Standardized Options before considering any options transaction. Supporting documentation for any claims, if applicable, will be furnished upon request. Tax considerations with options transactions are unique and investors considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy.

Options Order Flow Rebates.
If you are enrolled in our Options Order Flow Rebate Program, Public Investing will share a percentage of our estimated order flow revenue for each completed options trade as a rebate to help reduce your trading costs. Rebate rates vary monthly from $0.06-$0.18 and depend on your current and prior month’s options trading volume. This rebate will be deducted from your cost to place the trade and will be reflected on your trade confirmation. To learn more, see our Options Rebate Program Terms & Conditions, Order Rebate FAQ and Fee Schedule.

Bonds.
“Bonds” shall refer to corporate debt securities and U.S. government securities offered on the Public platform through a self-directed brokerage account held at Public Investing and custodied at Apex Clearing. For purposes of this section, Bonds exclude treasury securities held in treasury accounts with Jiko Securities, Inc. as explained under the “ Treasury Accounts” section.

Investments in Bonds are subject to various risks including risks related to interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. The value of Bonds fluctuate and any investments sold prior to maturity may result in gain or loss of principal. In general, when interest rates go up, Bond prices typically drop, and vice versa. Bonds with higher yields or offered by issuers with lower credit ratings generally carry a higher degree of risk. All fixed income securities are subject to price change and availability, and yield is subject to change. Bond ratings, if provided, are third party opinions on the overall bond's credit worthiness at the time the rating is assigned. Ratings are not recommendations to purchase, hold, or sell securities, and they do not address the market value of securities or their suitability for investment purposes.

A Bond Account is a self-directed brokerage account with Public Investing. Deposits into this account are used to purchase 10 investment-grade and high-yield bonds. The Bond Account’s yield is the average, annualized yield to worst (YTW) across all ten bonds in the Bond Account, before fees. A bond’s yield is a function of its market price, which can fluctuate; therefore a bond’s YTW is not “locked in” until the bond is purchased, and your yield at time of purchase may be different from the yield shown here. The “locked in” YTW is not guaranteed; you may receive less than the YTW of the bonds in the Bond Account if you sell any of the bonds before maturity or if the issuer defaults on the bond. Public Investing charges a markup on each bond trade. See our Fee Schedule.

Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. You should evaluate each bond before investing in a Bond Account. The bonds in your Bond Account will not be rebalanced and allocations will not be updated, except for Corporate Actions.

Fractional Bonds also carry additional risks including that they are only available on Public and cannot be transferred to other brokerages. Read more about the risks associated with fixed income and fractional bonds. See Bond Account Disclosures to learn more.

High-Yield Cash Account.
A High-Yield Cash Account is a secondary brokerage account with Public Investing. Funds in your High-Yield Cash Account are automatically deposited into partner banks (“Partner Banks”), where that cash earns interest and is eligible for FDIC insurance. See here for a list of current Partner Banks. Your Annual Percentage Yield is variable and may change at the discretion of the Partner Banks or Public Investing. Apex Clearing and Public Investing receive administrative fees for operating this program, which reduce the amount of interest paid on swept cash. Neither Public Investing nor any of its affiliates is a bank. Learn more.

Cryptocurrency.
Cryptocurrency trading, execution, and custody services are provided by Bakkt Crypto Solutions, LLC (NMLS ID 1828849) (“Bakkt”). Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrencies offered by Bakkt are not securities and are not FDIC insured or protected by SIPC. Your cryptocurrency assets are held in your Bakkt account. Bakkt is a licensed virtual currency business by the New York State Department of Financial Services and a licensed money transmitter, but is not a registered broker-dealer or a FINRA member. Your Bakkt Crypto account is separate from your brokerage account with Public Investing, which holds US-listed stocks and ETFs. Please review the Risk Disclosures before trading.

Treasury Accounts.
Investing services in treasury accounts offering 6 month US Treasury Bills on the Public platform are through Jiko Securities, Inc. (“JSI”), a registered broker-dealer and member of FINRA & SIPC. See JSI’s FINRA BrokerCheck and Form CRS for further information. JSI uses funds from your Treasury Account to purchase T-bills in increments of $100 “par value” (the T-bill’s value at maturity). T-bills are purchased at a discount to the par value and the T-bill’s yield represents the difference in price between the “par value” and the “discount price.” Aggregate funds in your Treasury Account in excess of the T-bill purchases will remain in your Treasury Account as cash. The value of T-bills fluctuate and investors may receive more or less than their original investments if sold prior to maturity. T-bills are subject to price change and availability - yield is subject to change. Past performance is not indicative of future performance. Investments in T-bills involve a variety of risks, including credit risk, interest rate risk, and liquidity risk. As a general rule, the price of a T-bills moves inversely to changes in interest rates. Although T-bills are considered safer than many other financial instruments, you could lose all or a part of your investment. See Jiko U.S. Treasuries Risk Disclosures for further details.

Investments in T-bills: Not FDIC Insured; No Bank Guarantee; May Lose Value.

Banking services and bank accounts are offered by Jiko Bank, a division of Mid-Central National Bank. JSI and Jiko Bank are not affiliated with Public Holdings, Inc. (“Public”) or any of its subsidiaries. None of these entities provide legal, tax, or accounting advice. You should consult your legal, tax, or financial advisors before making any financial decisions. This material is not intended as a recommendation, offer, or solicitation to purchase or sell securities, open a brokerage account, or engage in any investment strategy.

Commission-free trading refers to $0 commissions charged on trades of US listed registered securities placed during the US Markets Regular Trading Hours in self-directed brokerage accounts offered by Public Investing. Keep in mind that other fees such as regulatory fees, Premium subscription fees, commissions on trades during extended trading hours, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Public’s Investing’s Fee Schedule to learn more.

Fractional shares are illiquid outside of Public and not transferable. For a complete explanation of conditions, restrictions and limitations associated with fractional shares, see our Fractional Share Disclosure to learn more.

Investment Plans. Investment Plans (“Plans”) shown in our marketplace are for informational purposes only and are meant as helpful starting points as you discover, research and create a Plan that meets your specific investing needs. Plans are self-directed purchases of individually-selected assets, which may include stocks, ETFs and cryptocurrency. Plans are not recommendations of a Plan overall or its individual holdings or default allocations. Plans are created using defined, objective criteria based on generally accepted investment theory; they are not based on your needs or risk profile. You are responsible for establishing and maintaining allocations among assets within your Plan. Plans involve continuous investments, regardless of market conditions. Diversification does not eliminate risk. See our Investment Plans Terms and Conditions and Sponsored Content and Conflicts of Interest Disclosure.

Alpha.
Alpha is an experiment brought to you by Public Holdings, Inc. (“Public”). Alpha is an AI research tool powered by GPT-4, a generative large language model. Alpha is experimental technology and may give inaccurate or inappropriate responses. Output from Alpha should not be construed as investment research or recommendations, and should not serve as the basis for any investment decision. All Alpha output is provided “as is.” Public makes no representations or warranties with respect to the accuracy, completeness, quality, timeliness, or any other characteristic of such output. Your use of Alpha output is at your sole risk. Please independently evaluate and verify the accuracy of any such output for your own use case.

Market Data.
Quotes and other market data for Public’s product offerings are obtained from third party sources believed to be reliable, but Public makes no representation or warranty regarding the quality, accuracy, timeliness, and/or completeness of this information. Such information is time sensitive and subject to change based on market conditions and other factors. You assume full responsibility for any trading decisions you make based upon the market data provided, and Public is not liable for any loss caused directly or indirectly by your use of such information. Market data is provided solely for informational and/or educational purposes only. It is not intended as a recommendation and does not represent a solicitation or an offer to buy or sell any particular security.

View Full Disclosures