Facing stagnation since the 1990s, Japan's central bank and domestic institutions bought nearly all its debt. The U.S. is now on a similar path, aiming to inflate its debt away relative to GDP, with Japan providing a historical playbook for this soft default.

Instead of the Fed openly buying government debt (QE), new regulations compel private entities to do it. Loosened bank reserve requirements and laws forcing stablecoins to be backed by Treasuries create a massive, captive market for US debt. This hides money printing one layer deeper, making it harder for the public to track.

When investors stop buying government bonds, the central bank is forced to print money to cover the debt. The market anticipates this, triggering a self-fulfilling prophecy of high inflation, which effectively devalues the debt and impoverishes citizens.

Inflation is a political tool to manage national debt without raising taxes or cutting spending. The government repays debt issued in valuable pre-inflation dollars with newly printed, less valuable post-inflation dollars, effectively reducing the debt's real value at the expense of savers.

To control rising long-term interest rates caused by a loss of market confidence, the U.S. is buying its own 10-30 year bonds. This is funded by issuing short-term IOUs that the Fed purchases—an act of money printing disguised withodyne names like "liquidity easing."

Raising taxes or cutting spending are politically impossible for tackling the massive U.S. debt. The only acceptable route for politicians is to print more money, a "soft default" that devalues the currency and effectively acts as a hidden tax on savers and wage earners.

Japan's economic model of holding rates low by buying its own debt became unsustainable when inflation hit. The US is now mirroring this exact playbook, with the Treasury buying US bonds. This suggests America is on a similar trajectory towards a debt-induced crisis.

The Federal Reserve's ability to print money is a direct mechanism to take value from every citizen without legislation. It is mathematically equivalent to government-sanctioned counterfeiting, devaluing currency and transferring wealth from the populace to the government, acting as a tax.

The current Treasury buybacks, funded by T-bill issuance, set the stage for a more extreme policy: direct debt monetization. This would involve the Federal Reserve purchasing the newly issued T-bills directly from the Treasury, effectively printing money to finance fiscal operations.