Disclosure. I am a licensed Financial Security Advisor, Mutual Fund Representative, and Group Insurance & Annuity Plans Advisor. I am not a lawyer, tax lawyer, or accountant. I discuss taxes only as they relate to specific insurance, investment, and estate strategies; I do not provide general tax optimization or comprehensive financial planning. Content is educational only. Mutual funds offered through WhiteHaven Securities Inc. Insurance products offered through iAssure Inc. Coordinate decisions with your CPA, notary, or lawyer. See Disclaimer and Privacy.
Why this is important
Multiple forces are creating downward pressure on the US dollar and Canadian dollar.
US debt has reached $38 trillion. Trillions more need refinancing in 2026.
Central banks are selling Treasuries and buying gold at record pace.
All arrows point in the same direction: fiat currency weakness.
Multiple forces are converging. All arrows point the same direction.
The Picture Is Getting Worse
In Part 1, we estimated felt inflation of 3.0 to 3.5% annually over the past 25 years. But the real acceleration was in the last five years. Right now, we may be experiencing 5 to 8% felt inflation. And several forces are converging that could push it higher still.
The Six Forces
1
Quantitative Easing: Money Creation at Scale
Fed Balance Sheet Pre-COVID
$4T
Peak (Mid-2022)
$8.9T
M2 Money Supply
Pre-COVID to current
$15T → $22T+
In December 2025, the Fed reversed course. It resumed Treasury purchases at ~$40 billion per month. When money supply grows faster than output, prices tend to rise.
2
US Debt: $38 Trillion and Growing
Current Debt
$38T
Maturing in 2026
$6-9T
Annual Interest
~$1T
Trillions in debt mature each year. The government issues new debt to refinance. The most likely path: more debt, more Fed support, more money creation.
3
Central Banks: Selling Treasuries, Buying Gold
Gold Price (Early 2023)
$1,800
Gold Price (Late 2025)
$4,300+
CB Gold Buying (Annual)
1,000+ tonnes
China and Japan are reducing Treasury holdings. Central banks bought over 1,000 tonnes of gold for the third consecutive year. Gold has more than doubled in under three years.
4
Yen Carry Trade: Massive Unwinding
Estimated size: $1 trillion to $4 trillion. Investors borrowed cheap yen to buy US dollar assets. The Bank of Japan raised rates, narrowing the spread. Now they're unwinding: selling dollar assets to repay yen loans. This creates selling pressure on the dollar.
5
Policy Direction: Weaker Dollar May Be Intentional
A weaker dollar makes exports competitive. It reduces the real value of debt. If the dollar loses 30% of value, the real burden of $38 trillion shrinks by roughly $11 trillion. Some analysts believe this is intentional.
6
The US-Canada Connection
Canadian Exports to US
75%
Imports from US
50%
The Canadian dollar moves with the US dollar. When US dollar weakens globally, Canadian purchasing power weakens too. A Canadian business owner cannot ignore US fiscal and monetary policy.
All Arrows Point the Same Direction
The Converging Forces
Force
Dollar Impact
Inflation Impact
Quantitative easing restarting
↓ Weakens
↑ Increases
US debt and deficits growing
↓ Weakens
↑ Increases
Central banks buying gold
↓ Weakens
Signals devaluation
Yen carry trade unwinding
↓ Weakens
Adds volatility
Policy toward weaker dollar
↓ Weakens
↑ Increases
Gold and commodities rising
Confirms weakness
Confirms devaluation
The Question: How High Could It Go?
The 1970s to early 1980s saw inflation of 10% to 15% per year. Mortgage rates reached 20%.
Similarities to today:
Large fiscal deficits
Central bank accommodation
Supply shocks
Growing skepticism about currency values
Differences:
Central banks have more credibility today
Inflation expectations remain somewhat anchored
Technology creates deflationary pressure in some sectors
The Math Going Forward
If felt inflation averaged 3 to 3.5% over 25 years but accelerated to 5 to 8% in the last five years, and if these six forces continue converging, where does that lead? Double-digit felt inflation is not out of the question. 10%+ per year is within the range of possibility if multiple forces intensify together.
The purchasing power impact:
This example is illustrative only and not a substitute for professional advice.
Assumptions: Compound inflation over 20 years; 5%, 8%, or 10% annual rate applied to purchasing power. Formula: (1 - 1/(1+r)^20) where r = inflation rate.
At 5% over 20 years
-62%
purchasing power
At 8% over 20 years
-79%
purchasing power
At 10% over 20 years
-86%
purchasing power
Cash and low-yield investments do not recover from this.
This Resonates If...
You have significant cash or conservative investments in your corporation
You have not considered currency devaluation in your strategy
Your long-term projections assume 2% inflation
You're planning for the next 10 to 20 years
Full Research
This article is a summary. For complete analysis, data sources, and methodology, see:
Inflation, Currency Devaluation, US Dollar, Canadian Dollar, Gold, Business Owner Strategy
Full Disclosure.
This content is for information and education only. It explains general concepts that may apply to incorporated business owners, but it is not personalized tax, legal, or investment advice.
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