Ex-Treasury Secretary Compared US to Third World Countries
Ex-Treasury Secretary Compared US to Third World Countries
Notes From the Field By James Hickman (Simon Black) January 19, 2026
Former Fed Chair and ex-Treasury Secretary Janet Yellen finally told the truth.
In recent remarks at the American Economic Association, she told the audience that US finances are in worse shape than most third-world countries. She said specifically that America's “needed belt tightening is significant—larger than in most programs supported by the International Monetary Fund."
Let that sink in for a minute. Remember, the International Monetary Fund provides emergency bailout funding for countries who are on the verge of bankruptcy. And naturally this IMF funding comes with strings attached: recipient countries are required to cut spending and tighten their belts.
Greece is the classic example of what happens when the IMF shows up.
By 2010, Greek debt had spiraled to 130% of GDP and climbing. No one was willing to lend them money anymore... forcing the IMF to swoop in with a "rescue" package that came with brutal strings attached.
Pensions were slashed by 40%. Public sector wages were frozen, then cut. Over 150,000 government workers were laid off. State assets—airports, ports, utilities—were sold off at fire-sale prices to foreign investors.
Greece's economy contracted by 25%. Youth unemployment hit 60%. An entire generation was hollowed out.
Argentina has been through the IMF wringer multiple times; in fact in in 2018, Argentina received the largest bailout in IMF history: $57 billion.
The conditions? Currency controls. Spending freezes. Slashed subsidies. Inflation still ripped past 50%. Poverty rates surged past 40%. The middle class was gutted. (These conditions are what ultimately led to the election of Javier Milei).
Sri Lanka is the most recent cautionary tale.
In 2022, after years of fiscal mismanagement, the country defaulted on its debt. The IMF demanded fuel subsidy cuts, electricity price hikes, and tax increases. Inflation hit 70%. Riots erupted, culminating in protesters storming the Presidential palace.
Pakistan, Egypt, Ukraine, Ecuador, Zambia—the list goes on. Whenever the IMF shows up, a nation loses its sovereignty. Foreign bureaucrats start dictating your tax rates, your spending priorities, your pension formulas.
And here's Janet Yellen—former Fed Chair, former Treasury Secretary—calmly, academically stating that America needs a bigger fiscal adjustment than most of these countries that the IMF bailed out.
She said the quiet part out loud (though coincidentally failed to admit that she was complicit in engineering this crisis).
Now, there are several critical differences between the US versus Greece, Sri Lanka, etc.
The US has a highly robust and productive economy with far more growth potential.
America also possesses (for now) the world's reserve currency.
If Sri Lanka runs out of money, they have no choice but to accept whatever terms the IMF dictates. But the US has the luxury of ‘printing’ its own money to finance the deficit.
And that's exactly what's happening: the Federal Reserve has quietly started buying Treasuries again—expanding reserves and injecting money into a system where inflation is already climbing.
The problem is, ‘printing’ money only works as long as the world keeps accepting dollars. Foreign creditors need to trust they'll be paid back—and that the dollars they receive will still be worth something.
When that confidence erodes, they start to diversify into other assets. And we’re seeing that play out now.
Central banks around the world have been aggressively dumping US dollars and buying gold—hence why the gold price surged over 60% last year. Foreign central bankers are not waiting around to see how America’s debt challenge plays out.
The US government is running out of time to demonstrate to the world that they are serious about cutting spending. And it’s not like there isn’t plenty of fat to trim.
Yet nothing ever happens. Just look at the Minnesota welfare fraud as an example: you’d think the entire country would be united against stopping the fraud.
Instead, apologists have downplayed it. They call critics “racist” and claim that there’s plenty of fraud elsewhere, so why is everyone so focused on Minnesota daycare facilities..?
The President tried to cut funding, and he immediately got sued. Then some activist masquerading as a federal judge ruled against the President, ensuring that the fraud would keep flowing.
If there is to be any change, it’s ultimately going to come down to Congress and its extremely cumbersome appropriations process.
Bear in mind, we’re talking about an institution that can’t even agree to a basic budget without threatening a full-blown government shutdown. So I wouldn’t hold my breath that they’re going to suddenly cut out fraudulent spending.
Yet while it’s doubtful that Congress will suddenly grow a brain, a conscience, and a backbone, it is still possible that you as an individual can sidestep the risks.
Real assets—precious metals, energy, agriculture, productive businesses—hold value regardless of what politicians do to the dollar. And if fiscal instability finally forces the reckoning Yellen warned about, these are the assets that benefit most.
We've been positioning for exactly this environment in our real assets investment research service Strategic Assets.
For example, we've identified gold miners that are now up over 400% since we first highlighted them—plus producers still trading at single-digit earnings multiples despite making money hand over fist with exploding margins at $4,000+ gold.
Last week we released our latest issue, which includes this analysis in full, plus specific undervalued opportunities positioned for the chaos ahead— a core American food producer, a gold mining services company, and a miner that has cornered the market on an industrial metal necessary for all technology. We’re offering a free, full, unredacted issue of Strategic Assets as a sample.
To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC