Big Burdensome Boondoggle

 

The US Congress is fighting hard to add 5 trillion dollars to the massive fiscal deficit plaguing the debt soaked economy our children will inherit.  

That's on top of the 2 trillion dollars a year they are spending now - (not counting the 100 trillion dollars of of off budget unfunded liabilities that gernerations have paid into - but which has already been spent by our profligate congress (social security, medicare.))

What about Doge?  Oh yeah they saved 60 billion dollars by cutting all spending on Science (who needs clean air and water and food - if you're a billionaire you can live on top of a mountain in Aspen and drink mountain stream water and have your foie gras flown in). 

But congress has been spending like this for the last 50 years - so what's the probelm?

Here's the problem: Congress had a 20 percent Paul Volker interest rate to cut every time the economy slowed.  That lasted a good 50 years.  Now,  that is gone.  

And Congress had a globalized economy wherein we were happy to sell our dollars all around the world so that our trading partners could subsidize our debt thus keeping rates low (the Capital Surplus that is the other side of the balance sheet to the Trade Deficit).  That is gone.

Now, as the economy slows with real rates negative (under the cost of real inflation) and with nobody to buy our debt but the Fed or the US banks subsidized by the Fed (same thing) - all we can do to fight a slowdown is flood the economy with printed dollars and thus create MASSIVE INFLATION.   

And here's the dirty little secret about inflation: things only get more and more expensive relative to disposable income.  The INFLATION RATE that the government prints is not a meausre of inflation but the the rate of change of inflation (by their anemic measures.  In fact the BLS has been ordered to make sure their inflation prints are in line with the Regime's projections)   But all the inflation that's occured the last 50 years is STILL THERE.  It's simply growing at a faster or slower rate.  

Nothing will ever be less expensive than it is now.

And that includes the interest payment on the US DEBT.

And that is why even as the economy slows long dated treasury rates are rising and the dollar is sinking.

That is the behavior associated with  an emerging market economy.  Not the Reserve currency economy.

All the central banks of the world have noticed are dumping dollars and buying gold. 

Maybe you should consider the strategy.