Part 5/8:
Critics argue that the U.S. Treasury has entered a precarious Ponzi scheme of borrowing. With each loan the government takes from the Federal Reserve, new money is created backed by an IOU—a cycle requiring continual borrowing to cover previous debts plus interest. This unsustainable model poses dire questions about the future viability of the U.S. dollar as a global reserve currency.
Should foreign entities lose confidence—either from economic mismanagement, geopolitical tensions, or another crisis—market reactions could exacerbate the situation, potentially triggering a currency crisis. This could lead to higher interest rates and a spiral of debt-and-default scenarios akin to that seen in historic financial collapses.