The Freeze

 Watch:  Housing Prices Didn't Crash — Dalio Says What's Happening Is Far Worse

[Ray] Dalio's debt cycle framework identifies two distinct types of housing crisis. The crash and the freeze. Most people are watching for the crash. The crash is fast. Prices fall sharply. Buyers return because the math works again. The market clears. Painful. But it resolves. The freeze is different. Prices do not fall. They suspend. Sellers will not sell because giving up their 3% mortgage to buy again at 7% nearly doubles their monthly payment on an equivalent home. So, they stay even when the carrying costs are rising around them. Buyers cannot buy because at 7% mortgage rates, the monthly payment on a median-priced American home requires a household income of $110,000. Median American household income is $77,000. Sellers will not sell. Buyers cannot buy. The market stops. That is the freeze. And in Dalio's framework, the freeze is more destructive than the crash. Not because  it is more dramatic, because it lasts longer, and because it erodes equity silently, while the official price appears stable. 

What Happened in Japan  Here is the historical evidence for how long it lasts. Japan, 1991. Property prices in Tokyo peaked. In the 15 years that followed, prices fell 60%. Not in a crash, in a freeze. Sellers refusing to accept lower prices. Buyers unable to qualify at existing prices. A market that appeared stable on the surface while declining beneath it. American housing in 2026 has the same -structural configuration. Sellers locked in, buyers locked out. The only question is duration. Japan's freeze lasted 15 years.

My comments: It could be 15 years before the freeze ends.  The housing market peaked between 2022 and 2024, depending on location, so it could be frozen until 2037 to 2039.

How to get out of this situation?  The shortest but most painful way is for there to be a housing crash.  The Fed could rise rates 2% or more (so the mortgage rates would be above 8%) and force a housing crash at which point buyers could afford to buy again, albeit at higher interest rates.  But this is not going to happen because it will cause too many foreclosures.

Alternatively, the Fed could drop rates by 2% or more and allow inflation, but this will make it even worse.  If mortgage rates drop down to 3% again, then this will cause house prices to soar again and then when rates increase again, the freeze will re-emerge, but even worse.

What if rates drop but not too much, maybe by 1%.  This is probably the best that can be hoped for.  At lower rates, the pool of buyers will increase.

2026 Social Security Report

 The 2026 Social Security Trustees Report was recently released.  First, look at the magic words:

The combined trust funds’ reserves were about $2.56 trillion at the end of 2025. The combined trust fund reserves decline on a present value basis after 2025 but remain positive through 2033. However, this cumulative amount becomes negative beginning in 2034, which means that the combined OASI and DI Trust Funds have a net unfunded obligation through the end of each year after 2033. Through the end of 2100, the combined funds have a present-value unfunded obligation of $29.3 trillion.

Expressed in present-value dollars discounted to January 1, 2026, the 75-year open-group unfunded obligation for OASDI is $29.3 trillion, or 1.5 percent of GDP over the years 2026-2100. In last year’s report, the unfunded obligation was $25.1 trillion, or 1.3 percent of GDP over the years 2025-99.

So the funds become depleted in 2034, the same as in last years report.  The 75 year unfunded obligation increased from $25.1 trillion to $29.3 trillion, an increase of $4.2 trillion, which is not good at all.  In 2024 this number was $22.6 trillion.

Now, what is the expected GDP in 2070 under intermediate assumptions?

In the 2024 report, the expected GDP in 2070 is 176,496.

In the 2025 report, the expected GDP in 2070 is 176,236.

In this 2026 report, the expected GDP in 2070 is 168,283.  (This was very hard to find - it is on page 223 of the pdf).

I don't know why expected GDP is less than before but this is not good.

What happens when the trust fund depletes?  I keep changing my mind on this.  In the past I believe that we could assume that Social Security would continue to be paid out of general funds.  But now, I think that Social Security benefits will be cut about 20-25% and this will cause a breakdown and fiscal crisis because of the contradiction.  (Social Security MUST be cut!  Social Security CAN'T be cut!).

I am not going to update my forecast of a breaking point and possible financial crisis which is currently set for 2048, but I think it will happen before that.

Robotic cats help dementia patients

 https://www.uchealth.org/today/robotic-companion-pets-help-older-hospital-dementia-patients

Lifelike cats, dogs and birds help older patients stay calm and feel at home when they have to be hospitalized. If the success of a UCHealth pilot project is any measure, robotic cats, dogs, and birds could become pivotal in supporting older patients.

Robotic companion pets first emerged as care enhancers for dementia patients in 2004 with the commercialization, in Japan, of a baby harp seal robot called PARO. The idea was to help reduce loneliness, agitation and anxiety among people with dementia. PARO cost several thousand dollars, and its target market was nursing care facilities rather than hospitals.

But at a conference early this year, Jennifer Rodgers, University of Colorado Hospital’s chief nursing officer, attended a presentation about PARO’s benefits for hospitalized dementia patients. She discussed the possibility of robotic companion pets with Fehlig, who did some research and suggested using robotic cats, dogs and birds rather than the baby seal. There were several advantages to switching from aquatic to dryland creatures.

Deficit of $294 Billion in May 2026

 The federal government incurred a deficit of $294 billion in May 2026, CBO estimates— $21 billion less than the deficit recorded for the previous May.  The federal budget deficit totaled $1.2 trillion [actually $1.248 trillion] in the first eight months of fiscal year 2026, the Congressional Budget Office estimates. That amount is $116 billion less than the deficit recorded during the same period last fiscal year [which was $1.364 trillion]. Revenues rose by $174 billion (or 5 percent), and outlays increased by $57 billion (or 1 percent).  Outlays for net interest on the public debt rose by $28 billion (or 32 percent) [to $742 billion FYTD].

The Debt Held By the Public as of 5/29/26 was $31.5 trillion, compared to $30.0 trillion as of 5/30/25, so it increased almost exactly 5% over the last year.

Catfight

 Candace Owens' most revolting attack EVER: In a new rant almost too atrocious to publish, she takes her nastiest MAGA feud nuclear... sending shockwaves into the heart of the White House

Source: https://www.dailymail.com/news/article-15864557/candace-owens-laura-loomer-attack-white-house-trump.html

This is something involving Laura Loomer.

I don't really care, but I will follow up at some point with more details.  I used to support Candace Owens 100%, but that ended after her attempted take-down of Victor Marx.  Laura Loomer is a nasty women, and Candace is stupid for even responding; she should have been smart enough to take the high road.  Now this is like bikini mud wrestling between two ugly broads - I don't care who wins, but it is mildly entertaining.

How the US is Quietly Erasing The $39 Trillion National Debt

 See: https://www.youtube.com/watch?v=rRumSzwsaRw

THREE WAYS OUT When a government has this much debt, there are only three realistic paths: austerity, default, or inflation. Austerity means tax hikes and spending cuts, but that is politically almost impossible because it would require painful cuts to programs like Social Security, Medicare, and defense. Default would be catastrophic because U.S. Treasuries are the foundation of the global financial system. That leaves the third option: slowly shrinking the debt through inflation. INFLATION SOLUTION If the government pays 2.5% interest while inflation runs at 6%, the real value of the debt shrinks by 3.5% per year. The debt technically remains, but its burden becomes smaller. This is how governments can quietly reduce debt without officially defaulting or admitting that savers are absorbing the cost. FINANCIAL REPRESSION The U.S. used this playbook after World II. Debt reached roughly 106% of GDP, and instead of paying it down through responsible budgeting, the government kept interest rates artificially low while inflation ran higher. Treasury bills were pegged at 0.375%, long-term bonds at 2.5%, and inflation at times reached double digits. Savers and bondholders earned negative real returns, while the national debt was inflated away over time.

I have blogged about this before, see: https://aftermath2022.blogspot.com/2026/04/financial-repression.html

So, we should expect more inflation.

Now, look at Graham Stephan's links, copied from a link off his video.

CLAIM: SOURCE:

USA Debt-To-GDP https://www.visualcapitalist.com/wp-content/uploads/2021/06/US_Debt_to_GDP_Shareable.jpg

America's Path To $38T National Debt https://finance.yahoo.com/news/america-path-38-trillion-national-140000583.html

National Debt Surpasses WW2 Peak https://fortune.com/2026/05/08/america-national-debt-surpass-ww2-peak-washington-budget-cuts-tax-rich-deficit/

National Debt Will Hit $50T By 2030 https://www.forbes.com/sites/eriksherman/2026/01/26/at-current-rates-the-national-debt-will-hit-486-trillion-by-2030/

Government Interest Cost Over Time https://www.cato.org/sites/cato.org/files/styles/pubs_2x/public/2023-03/interest%20costs.png?itok=-pkpZSIS

The Debt Spiral - Explained https://www.crfb.org/blogs/cbo-projects-possible-debt-spiral-r-exceeds-g

The Federal Reserve Rate Cut Plan https://www.usatoday.com/story/money/2025/07/03/trump-fed-rate-cuts-us-debt/84440487007/

 Government Interest Exceeds National Defense https://fortune.com/2026/04/29/39-trillion-national-debt-defense-spending-donald-trump/

 Policy Budgets Over Time https://www.cato.org/research-briefs-economic-policy/look-back-ahead-federal-budget

Plan To Cut $1T Spending In Big Beautiful Bill https://www.foxnews.com/politics/gop-unveils-plan-cut-deficit-1-trillion-second-big-beautiful-bill

Financial Repression https://en.wikipedia.org/wiki/Financial_repression

USA Debt-To-GDP Adjusted For Spending https://thedailyeconomy.org/wp-content/uploads/2026/05/image-2.png

Inflation Rates Throughout The 1940s https://www.lynalden.com/wp-content/uploads/policy-1940s-inflation-rates.png

How The USA Saved The National Debt https://www.imf.org/-/media/files/publications/wp/2024/english/wpiea2024005-print-pdf.pdf

Kevin Warsh Joins Federal Reserve https://www.barrons.com/articles/kevin-warsh-federal-reserve-plan-f3da1a02

Kevin Warsh Appointed Chair of Federal Reserve https://www.theguardian.com/business/2026/may/11/senate-kevin-warsh-federal-reserve-chair

Federal Policy Changes Over Time https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm

Inflation - Substitution Bias https://www.nber.org/papers/w33665

Hedonic Adjustments To Inflation https://www.bls.gov/cpi/quality-adjustment/questions-and-answers.htm