The point of no return is well in the rear view mirror. The dollar is holding up because TINA, remember that forex is all relative. Janet is not borrowing any money because she is just swapping Treasuries for bank reserves, neither of which count as money. The reserves go in the TGA, on which she writes checks, which are then deposited by the payee, creating money. This makes the economy look good, at least by the government's statistics. The inflation tsunami is that dark line on the horizon. Right now I don't see any way to avoid it short of a depression.
However, there is another "...way to avoid it short of a depression."
Government will simply complete their takeover of what remains of the private-sector and turn the whole system into a "command" economy, like the USSR had. The government and media will go on pretending that the private-sector still exists, that the money is real, and so on. The way that Rome went on pretending it was a republic after it had become a dictatorship.
I lay out this scenario in my Substack "The U.S. Economy versus the American Economy".
There are no alarm bells in Washington, except perhaps when Congress folks are trying to delay a vote so pull the fire alarm 'accidentally'.
If I had to bet, I would estimate the Fed will be coerced into buying before it all blows up, but that means inflation will need to be recalculated again to show it is not rising!
government will keep on printing money and real inflation will always be more that what the government says it is.Problem is what i’ve seen for the last 50 years is not any politicians the time they are in office really clamp down on silly spending.Conservative families that run a house hold,buissness do that and sacrifice for the long haul benefit.Politicians are looking a short term gain free spending and just passing the problems onto the next elected politicians and political parties….its rinse and repeat
What happens when the Treasury has difficulty financing a “rollover” of debt. When will people say no more. Of course plenty of people are buying bonds now but I would be careful…
There is no $10T or $5T in the world to buy that much US Bonds. Not even close. Japan holds around $1T and China under $1T and everyone else a lot less. And those are total numbers not annual purchases, so let me say this again, there are NO trillions of dollars in the world on an annual basis to just buy US bonds. That number historically has always been under $1T total.
I have absolutely zero idea who and how is buying $1T of new US Bonds every 100 days plus the old rollovers.
They weren’t wrong about those debt-to-GDP numbers. Nor were many of the other prophets wrong in theory. They all underestimated the Feds’ (and the Fed’s) ability to stall while making the problem worse.
It's impossible to know the breaking point. Know that no parabolic rise ever continues without crashing back to earth. The timing is the thing. Impossible to know with any reasonable assumptions.
The scariest thing is that none of these clowns in the DC Swamp know much about anything financial or economic. It's all political and agenda following. It is vote buying and wealth destruction at the same time.
Who is going to buy $8 trillion in regurgitated government debt when faith and trust in government is falling as fast of the deficit is rising? There is no one to trust to get a handle on this.
With inflation, $1 trillion is not the same as it was even 20 years ago. The government is a lost cause since it needs to spend $2 to generate $1 of possible growth. That is a losing proposition no matter how the government juggles the books and voids the laws of economics.
"...magically shrink, either outright or at least as a percentage of GDP."
Magically, it's even worse. Because GDP actually measures spending, not production. INCLUDING GOVERNMENT SPENDING. So if gov cuts way back on spending (as Milei just did in Argentina) to pay back the debt, GDP will have to fall. Thus the debt would not shrink much if any as a percentage of GDP.
I explain this about GDP in "The GDP Lie" in my Substack.
Your graph of escalating interest payments may become America's last line of defense against globalist/CCP destruction of our economy: They'd all stand to lose primo income if we go dark.
The point of no return is well in the rear view mirror. The dollar is holding up because TINA, remember that forex is all relative. Janet is not borrowing any money because she is just swapping Treasuries for bank reserves, neither of which count as money. The reserves go in the TGA, on which she writes checks, which are then deposited by the payee, creating money. This makes the economy look good, at least by the government's statistics. The inflation tsunami is that dark line on the horizon. Right now I don't see any way to avoid it short of a depression.
You're absolutely right.
However, there is another "...way to avoid it short of a depression."
Government will simply complete their takeover of what remains of the private-sector and turn the whole system into a "command" economy, like the USSR had. The government and media will go on pretending that the private-sector still exists, that the money is real, and so on. The way that Rome went on pretending it was a republic after it had become a dictatorship.
I lay out this scenario in my Substack "The U.S. Economy versus the American Economy".
https://open.substack.com/pub/michael796/p/the-us-economy-versus-the-american
There are no alarm bells in Washington, except perhaps when Congress folks are trying to delay a vote so pull the fire alarm 'accidentally'.
If I had to bet, I would estimate the Fed will be coerced into buying before it all blows up, but that means inflation will need to be recalculated again to show it is not rising!
government will keep on printing money and real inflation will always be more that what the government says it is.Problem is what i’ve seen for the last 50 years is not any politicians the time they are in office really clamp down on silly spending.Conservative families that run a house hold,buissness do that and sacrifice for the long haul benefit.Politicians are looking a short term gain free spending and just passing the problems onto the next elected politicians and political parties….its rinse and repeat
For any1 interested, here is my newest article giving the answer to the question - will Fed cut rates this year?
https://open.substack.com/pub/arkominaresearch/p/will-fed-cut-rates-this-year?r=1r1n6n&utm_campaign=post&utm_medium=web
What happens when the Treasury has difficulty financing a “rollover” of debt. When will people say no more. Of course plenty of people are buying bonds now but I would be careful…
There is no $10T or $5T in the world to buy that much US Bonds. Not even close. Japan holds around $1T and China under $1T and everyone else a lot less. And those are total numbers not annual purchases, so let me say this again, there are NO trillions of dollars in the world on an annual basis to just buy US bonds. That number historically has always been under $1T total.
I have absolutely zero idea who and how is buying $1T of new US Bonds every 100 days plus the old rollovers.
They weren’t wrong about those debt-to-GDP numbers. Nor were many of the other prophets wrong in theory. They all underestimated the Feds’ (and the Fed’s) ability to stall while making the problem worse.
It's impossible to know the breaking point. Know that no parabolic rise ever continues without crashing back to earth. The timing is the thing. Impossible to know with any reasonable assumptions.
The scariest thing is that none of these clowns in the DC Swamp know much about anything financial or economic. It's all political and agenda following. It is vote buying and wealth destruction at the same time.
Who is going to buy $8 trillion in regurgitated government debt when faith and trust in government is falling as fast of the deficit is rising? There is no one to trust to get a handle on this.
With inflation, $1 trillion is not the same as it was even 20 years ago. The government is a lost cause since it needs to spend $2 to generate $1 of possible growth. That is a losing proposition no matter how the government juggles the books and voids the laws of economics.
"...magically shrink, either outright or at least as a percentage of GDP."
Magically, it's even worse. Because GDP actually measures spending, not production. INCLUDING GOVERNMENT SPENDING. So if gov cuts way back on spending (as Milei just did in Argentina) to pay back the debt, GDP will have to fall. Thus the debt would not shrink much if any as a percentage of GDP.
I explain this about GDP in "The GDP Lie" in my Substack.
https://michael796.substack.com/p/9-the-gdp-untruth?sd=pf
Your graph of escalating interest payments may become America's last line of defense against globalist/CCP destruction of our economy: They'd all stand to lose primo income if we go dark.