A viral Reddit thread is making the rounds with a seductive argument: the US stock market can no longer go down. The logic runs like this — America owes $40 trillion in debt, interest payments are spiraling out of control, and the only exit is to print money, which inflates asset prices, which means stocks must keep rising forever. It's a compelling narrative. It's also one of the most dangerous ideas you can hold as an investor.
What the Great Meltup Theory Actually Says
The Reddit argument is built on a real economic concept that some economists call the great meltup. In every major bull market, there is a final euphoric phase where prices stop being driven by earnings or fundamentals and are instead driven entirely by momentum. Everyone around you appears to be getting rich, and prices keep rising simply because they have been rising.
These meltup scenarios are not rare. They have played out repeatedly throughout history, and the returns during them can be staggering — right up until the moment they aren't.
The most recent example is the 1999 dot-com bubble. From 1995 through March 2000, the NASDAQ rose roughly 400%, with the final year alone gaining nearly 90%. Investors genuinely believed the internet had permanently rewritten the laws of financial gravity. Then the NASDAQ lost 78% over the following two and a half years and didn't fully recover for more than a decade.
Japan offers an even more extreme case. The Japanese stock market rose 900% between 1975 and 1989. Land became so valuable that the Imperial Palace grounds were estimated to be worth more than all the real estate in California. When Japan began raising interest rates, the entire economy cracked. The stock market fell 60% in under two years, and it took 34 years just to break even.
The lesson from every historical meltup is consistent: they don't end because the underlying idea was good or bad. They end when there is no one left willing to buy in at higher prices.
The Debt-Driven Inflation Case — and Where It Has Merit
The Reddit theory's core claim is straightforward. The US government owes nearly $40 trillion, runs a $2 trillion annual deficit, and the most historically reliable escape route is financial repression — letting inflation quietly erode the real value of that debt over time. This is not speculation. It is literally how the United States eliminated the massive debt it accumulated after World War II: print money, keep interest rates artificially low, and let decades of mild inflation do the work.
When a government inflates its currency, assets priced in that currency tend to rise alongside it. This is why Goldman Sachs recently raised its S&P 500 target to 8,000, why Morgan Stanley and Deutsche Bank are projecting 17% growth, and why the M2 money supply has been tracking closely with stock market levels. The theory is directionally grounded in real economic history.
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Chart showing M2 money supply growth tracking alongside S&P 500 index performance
Watch at 12:30 →
But there is a significant gap between stocks will likely drift higher in a high-debt, inflationary world and it is mathematically impossible for stocks to fall. The Reddit post conflates these two very different claims, and that conflation is where the danger lies.
The Three Claims That Don't Hold Up
Claim 1: Interest Payments Are About to Exceed GDP
This is false. What is true — and worth taking seriously — is that the US debt-to-GDP ratio has exceeded 100%. That is a genuine concern. But notably, this also occurred in the 1950s, and the United States successfully inflated its way out of it while the stock market recovered and continued higher.
Claim 2: The Only Way to Cover the Debt Is to Print Money
Also not accurate. The US government covers its borrowing needs by selling Treasury bonds to investors, pension funds, corporations, and foreign governments. It is not a single person pressing a button. The real concern is structural: the more the government borrows, the more interest it owes, which requires more borrowing, which requires selling more Treasuries. This is a genuine long-term problem — but it is not the same as imminent, forced hyperinflationary money printing.
Claim 3: Stocks Always Inflate Proportionally During Hyperinflation
History directly contradicts this. Between 1918 and 1922, the German stock market lost 97% of its value before the hyperinflationary peak. Zimbabwe's stock market rose 500-fold in nominal terms during hyperinflation, then lost 99.8% of its value measured in US dollars. Venezuela posted a 22,000% nominal return in 2018 while the real economy contracted by over 50%. Even in the United States during the 1970s, with inflation averaging around 7% annually, the stock market went essentially nowhere in inflation-adjusted terms. Nominal gains masked real losses in purchasing power.
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Historical comparison of stock market returns versus inflation across hyperinflationary economies
Watch at 20:45 →
What Is Most Likely to Actually Happen
Based on the full historical record, the most probable outcome for the United States is not hyperinflation, not a debt default, and not an endless meltup. It is a prolonged period of financial repression — inflation running slightly above interest rates, quietly eroding the real value of the debt over decades while most people barely notice until a hamburger costs $35.
In this scenario, inflation stays in the 3–5% range. Interest rates drift gradually lower. Asset prices continue rising in dollar terms, but real returns — adjusted for inflation — may be significantly lower than investors have come to expect. Savers get quietly squeezed. Cash loses purchasing power. The government manages the debt burden through a combination of higher taxes, slower spending growth, and persistent mild inflation. It will not be dramatic. It will not make headlines. It will just run quietly in the background.
For the stock market specifically, yes — prices are likely to keep drifting higher over the long term as the dollar loses purchasing power. But this is entirely compatible with the market falling 30%, 40%, or even 50% along the way before recovering to new highs. Both things can be true simultaneously.
And right now, by almost every valuation metric, the stock market is expensive. The price-to-earnings ratio is roughly double its historical average. The CAPE ratio — a longer-term valuation measure — has only exceeded 40 twice in 140 years: at the peak of the dot-com bubble, and today. Stocks are currently more expensive than they were heading into the 1929 crash and the 2008 financial crisis.
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CAPE ratio chart showing current valuations compared to 1929, 2000, and 2008 market peaks
Watch at 24:10 →
What This Means for How You Invest
The Reddit post is directionally right: in a high-debt world, governments have a strong incentive to let inflation do the heavy lifting, and over the long run, that tends to favor owning stocks and real assets over holding cash. That part of the argument is sound.
But the idea that stocks cannot crash — that some structural guarantee exists because of government debt — is one of the most dangerous beliefs an investor can hold. It is precisely this kind of thinking that leads people to buy at record high valuations with no margin of safety, using leverage, with no plan for what happens when the market does what it has done many times before: fall sharply.
The investors who have historically come out ahead during inflationary periods were not the ones with the most leverage or the most concentrated bets. They were the ones who maintained steady income, stayed diversified, kept some cash on the sidelines, and — most critically — were never forced to sell at the wrong moment.
Stocks will outperform cash over the long term. But there are periods — sometimes lasting a decade or more — where the stock market loses money or goes nowhere in real terms. Many investors are not as patient as they believe themselves to be when they are living through those periods.
Keep buying consistently. Stay diversified. Maintain a margin of safety. And do not build your financial future on the assumption that a government bailout of asset prices is mathematically guaranteed — because throughout history, that assumption has reliably been the thing that destroys wealth rather than protects it.
