Jing Pan
6 min read
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If you go by the official numbers, the inflation spike of 2022 may feel like a thing of the past. But according to legendary investor Rick Rule — former president and CEO of Sprott U.S. Holdings — the U.S. dollar’s erosion in purchasing power is far from over.
The culprit, he says, is America’s massive and growing debt burden.
“The net present value of off-balance-sheet liabilities, which is to say Medicare, Medicaid, Social Security, federal pensions, military pensions — the net present value of unfunded federal promises in the United States exceeds $100 trillion,” Rule said in a recent interview with Kitco.
While the official U.S. national debt currently stands at $36.22 trillion, some experts estimate that unfunded liabilities are upwards of $70 trillion, pushing the total past $100 trillion.
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Rule warns that serving that debt will come at a cost to everyday Americans.
“We will have to allow the purchasing power of the U.S. dollar to decline so that we can honor our nominal debts while not honoring our real debts,” he explained in the interview. “I believe because of this $100 trillion in unfunded entitlement liabilities, that the U.S. dollar will lose 75% of its purchasing power over 10 years.”
It’s a stark outlook — but not without precedent. Rule pointed to the dollar’s steep decline in the 1970s as an example of how quickly purchasing power can evaporate.
After all, $100 in 2025 has the same purchasing power as just $12.05 in 1970, according to the Federal Reserve Bank of Minneapolis inflation calculator.
If Rule’s prediction of a 75% drop in the U.S. dollar’s purchasing power over the next decade proves accurate, it could mean serious trouble for anyone holding the greenback. So what does he rely on?
“I maintain liquidity in things like the U.S. dollar and the Canadian dollar — I save in gold,” he told Kitco.
Gold has served as a store of value for thousands of years — and for good reason. Unlike fiat currencies, the precious metal can’t be printed at will by central banks, making it a natural hedge against inflation and currency devaluation.
