Inside today’s Daily Journal…

Today, we conclude Porter’s three-part Journal about William Strauss and Neil Howe’s generational theory, which proposes that history runs in 80-plus-year cycles, divided into four distinct phases or Turnings.

Porter ended Tuesday’s part 2 by pointing out that the pattern is unmistakable: every Fourth Turning climax in Anglo-American history has been a mass confiscation of purchasing power, engineered by the state, to liquidate debts that could not otherwise be paid.

Now, Porter continues…

For the first time since Strauss and Howe began their work, the climax of our current Fourth Turning now has a precise mathematical trigger.

The wheel is not just turning – it is about to collapse.

Think about who our sovereign’s (the U.S. government) largest creditor is today? It isn’t the foreign bond holders. It’s the people who have been promised a pension and health care in their retirement.

The 2025 Social Security Administration Trustees Report, released June 18, 2025, explains exactly what’s happening in black and white:

But these forecasts all assume that the government will begin running balanced budgets. Ha! That inflation will not go back to 9% like it was in 2022. And that our economy keeps growing.

Of course, if things don’t go back to normal, the depletion of the Trust Funds will occur much faster. In fact, following the July 2025 passage of President Donald Trump’s One Big Beautiful Bill Act, the Social Security chief actuary revised the OASI depletion date forward once again – to 2032.

Every year, the depletion date moves closer, not farther.

And the political window for a graceful fix is already gone. The last trustees’ reports in which the math could have been fixed with modest tax increases or benefit tweaks were in the 1990s.

The accumulated hole has now grown past the point where any conceivable austerity package – even the abolition of the entire discretionary budget – could close it.

For the government, there’s no escape.

In October 2020 the U.S. paid $345 billion in net interest over 12 months. In October 2025 it paid $981 billion – a near-tripling in five years. We’re spending far more on interest than we’re spending on the war with Iran… and that’s a lot

The Congressional Budget Office (“CBO”) projects interest will consume 13.85% of all federal outlays in FY2026, 14.11% in FY2027, and 14.52% in FY2028 – and these projections assume the Treasury can keep rolling over $10 trillion of debt per year. But that won’t happen for much longer.

The CBO itself has put the year 2029 in print.

In its March 2025 Long-Term Budget Outlook, the CBO projects that federal debt held by the public will reach 107% of GDP in 2029 – breaking the 106% all-time record set in 1946 immediately after World War II.

The single worst debt burden in U.S. history – incurred to win the largest war in human history – will be surpassed, in peacetime, in 2029.

One century to the year since 1929.

China’s Treasury holdings have fallen 9% since the start of 2025 alone, and now sit at the lowest level since October 2008.

Central banks globally bought a record 1,082 tonnes of gold in 2022, 1,037 tonnes in 2023, over 1,000 tonnes in 2024, and another 244 tonnes in Q1 2025 alone – the heaviest official-sector gold accumulation since 1967, the year before the London Gold Pool collapsed.

The dollar’s share of global central-bank reserves has slipped below 47%, while gold’s share is climbing toward 20%.

For the first time since the 1990s, foreign central banks hold more gold than they do U.S. Treasuries. The world is voting with its vaults… that’s not good for the U.S. dollar.

This is the monetary Fourth Turning.

When debt service alone consumes a rising share of every budget and no level of interest rates can both restrain inflation and keep the state solvent, the central bank loses the ability to set monetary policy and becomes, de facto, the financing arm of the Treasury.

The Fed will not want to monetize. It will be forced to monetize. The political class will not want to devalue the dollar. It will be forced to devalue the dollar.

Because the alternative – an honest 23% to 40% cut in Social Security and Medicare benefits landing simultaneously on the largest, most politically active voting bloc in the country – is not a scenario any democratically elected government can survive.

Stein’s Law, formulated by President Richard Nixon’s chief economic adviser Herbert Stein, applies with merciless simplicity: If something cannot go on forever, it will stop.

The current trajectory of American fiscal policy cannot go on forever. Therefore, it will stop.

We know when: 2029. The only remaining variable is how.

And the “how” is what every prior Fourth Turning has already shown us.

Tell me what you think: [email protected]

Good investing,

Porter Stansberry
Stevenson, Maryland

1. Americans are financing their groceries. A new LendingTree survey found 29% of buy-now-pay-later (“BNPL”) users have tapped these loans for groceries, more than double the 14% recorded two years ago. Groceries now rank as the third-most-common BNPL purchase. The stress signal is sharpest among Gen Z (38%) and parents with kids under 18 (34%). Even more concerning, more than half (54%) of BNPL users say they couldn’t make ends meet without the loans.

2. Private credit stress enters a new phase. Private equity giant Thoma Bravo is handing software firm Medallia to its creditors – Blackstone, KKR, Apollo, and Antares – wiping out $5.1 billion in equity from its 2021 $6.4 billion buyout. For the past 18 months, the stress has shown up primarily as markdowns, redemption gates, and widening discounts to net asset value. We’re now seeing equity wipeouts and creditor takeovers – and Medallia was among the largest positions in Blackstone’s $80-billion Private Credit Fund (BCRED). With a quarter of direct lending in software, and $46.9 billion in tech loans already distressed, this likely won’t be the last firm to be turned over to creditors.

3. U.S. gas exports help fill the global void. Yesterday, the first liquefied natural gas (“LNG”) cargo shipped from the Golden Pass facility, a new $10 billion LNG export terminal located in the Texas Gulf Coast – a joint venture between QatarEnergy and ExxonMobil (XOM). At full capacity of 18 million tons per year – its 2027 goal – the new supply will help fill the global gas void created from the closure of the Strait of Hormuz. America is already the world’s leading LNG exporter, and the new capacity coming online over the next decade will cement its status as the undisputed global gas superpower.

Shares of Complete Investor and Tech Frontiers recommendation Alphabet (GOOG) have risen 13% the last month – propelled by the growing dominance of its AI platform Gemini, its partnerships with firms like Salesforce (CRM), and the expansion of its TPU processing chips to support AI agents.

Stan W. writes:

Porter Comment: I doubt it. It’s hard for people to understand nuance. And so far you haven’t gotten any of my rationale correct. But I can repeat myself.

Here I go: It seems more likely than not that another war in the Persian Gulf – especially one that impacts global oil supplies (and other things like fertilizer and helium) – isn’t bullish for the stock market or the bond market. Trump has been saying one thing after another to try and hide that reality, but, as I said when the conflict first began, the first casualty of war is the truth. You can’t believe anything you hear about the conflict from the news. Nothing.

I expect inflation and interest rates to rise and the market’s level of uncertainty to grow as this conflict continues. With stocks trading at very high multiples and with interest rates still relatively low, I’ve been concerned that we could see a significant correction in stock prices as interest rates rise. Specifically, I wrote that when the 10-year U.S. Treasury bond yield hits 5%, then it’s time to “get out of the pool,” meaning that I would change the official allocation in Porter’s Permanent Portfolio and increase the cash portion of the allocation from 25% to 50%. I explained that I would do so by selling our fixed income allocation, which as you may know is invested into property and casualty insurance stocks. That hasn’t happened yet. And I have not changed our official allocation.

Now, all of that is confusing enough… and I’m pretty sure most readers don’t really understand it. But I’ve said everything as clearly as I possibly can.

I also said: if you’re retired already or are approaching retirement, or simply know you can’t handle a 20% drawdown in your account, then you may want to take that action early and raise the cash allocation in your portfolio. If you decide to do that, my advice is to sell your bonds (aka, the insurance stocks).
That’s not because I don’t like those stocks – I do! It’s because when you’re raising cash, you’ve got to sell something.

Robert S. writes:

Porter Comment: Anything is possible. But it wasn’t stocks the government confiscated in 1933. It was gold. You can’t know what they will do. You just have to keep your head down and try your best to survive. I believe that owning great businesses is the one of the very best ways to do that, because I know that for our country to survive, our best companies will have to survive too.

Tom A. writes:

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