Government folks are going to pass-the-buck around like a hot potato, but socialists will embrace the crisis. When the monetary system implodes, a nation of debtors—unschooled in economics and history—will not merely embrace socialism; they will demand it.
Did you see that the DSA rejected AOC as a presidential candidate because they considered her too moderate? There’s really no hope of avoiding a lost quarter century spent chasing the quixotic (but fashionable) promise of communism. That will make what you can hold on to more important than whether gold or BTC ultimately carries the capitalist flag. Both can win under the coming anti-American regime.
Bond holders meanwhile will get carried out but they won’t be the only market participants to lose badly.
Mornin’ QTR. You’ve done a terrific job of keeping us informed & enlightened about the causes and consequences of the US debt as it explodes. Did you ever think that future generations may be speaking of MÀGA America like they speak of Weimar Germany?!? What I particularly like is that you are explaining that the consequences of the debt on bond markets is not some sort of “forecast” which are usually wrong at best and dangerous at worst but more of a maths problem. With the added political gotcha that AI investment will be competing with federal debt and Trump’s hands are tied to curtail AI capex because it is keeping his economy afloat. I’ve been preparing my portfolio for a couple years to have 1/3 (headed to 40%) in short term t-bills that I roll over - lying in wait for 10 years to hit 6% so I can load up and enjoy the cash flow amidst the chaos. You’ve helped me greatly with the thinking on this plan. Thanks.
6% or better are long overdue in my observation. 10 year has been sitting at some variation of 4% for over 20 years.
My curiosity in watching and learning about all of these market mechanics is this..was there such market participation and intervention by these agencies before Bernanke and the start of QE.
They all hate us anyway, let’s drop EMP bombs over Teheran, and all along the north side of the SOH. Bandar Abbas etc., and open it up for good. That will solve everything, no?
After WW2, starting in 1942, Chris is correct the US bought 75% of our own bonds driving yields to 2.5% on the 30 year. It also drove inflation to 18.1%. Gold and Bitcoin have only begun to respond to the world's greatest ponzi - the US dollar.
That interest rates are rising is in direct correlation to world wide economic conditions and market forces for commodities. In the case of oil, it's more of a refinery capacity problem.
Seems we had a 35-40 year long bond market rally with the latter third propelled by Fed interventions. But like all rallies, they are suspect to cycling. We are now in the downward stroke and the silly Fed is becoming more and more clueless and incapable.
Why would I buy a 6% bond when true inflation is 4-5% and rising? The US is cutting its own throat by engaging in useless wars which gobble up dollars and wreck havoc on supply systems. But that's the irrefutable stupidity of government. Blame it on the Russians, Iran, or Martians.
Maybe in a few years, the 30 year bond hits 7-8% or higher. That is not extremely outside of the historical average. The quicker the system blows up, the sooner it can be replaced with something more reasonable. The delay will only make the implosion that more forceful.
One reason the USA can run nominally large deficits is due to the fact that the debtors (taxpayers) have substantial assets backing the debt. After I retired I exchanged one asset - cash - for another - the equity in my home - by using the cash to payoff the mortgage. My net worth didn't change but I eliminated the interest expense. I guess that is the point; the interest expense is the problem not the level of debt.
That wasn’t a real picture? I bet even Treasury economists have a sense of humor.
I mean, when the entire body of thought is a joke, at some point it’s tooo hard (no pun intended) to pretend.
OH well. They could call it that & probably nobody would notice or care.
Drug use and Youtube stardom, cage fights, MMA, house flipping, side hustles, Ponzi schemes, sports betting, Only Fans, if you can survive to Sunday it’s church for 2 hours. Just to hedge.
P.S. I think they’re going to have to bail out AI on the alleged ground of national security. They can’t let the industry die it’s natural death and if they can tie it to Military Weapons Programs and Our Adversaries and China! Look! they may shut people up long enough. To put the DILDO in.
Nothing changes until the government cuts spending. The horse died, but we’re still handicapping the race. “DILDO” plan is brilliant.
Love your euphemism for the next round of money printing!! You have such an amusing way of lending humor to distressing subjects.
Great analysis, Chris.
Government folks are going to pass-the-buck around like a hot potato, but socialists will embrace the crisis. When the monetary system implodes, a nation of debtors—unschooled in economics and history—will not merely embrace socialism; they will demand it.
Did you see that the DSA rejected AOC as a presidential candidate because they considered her too moderate? There’s really no hope of avoiding a lost quarter century spent chasing the quixotic (but fashionable) promise of communism. That will make what you can hold on to more important than whether gold or BTC ultimately carries the capitalist flag. Both can win under the coming anti-American regime.
Bond holders meanwhile will get carried out but they won’t be the only market participants to lose badly.
Mornin’ QTR. You’ve done a terrific job of keeping us informed & enlightened about the causes and consequences of the US debt as it explodes. Did you ever think that future generations may be speaking of MÀGA America like they speak of Weimar Germany?!? What I particularly like is that you are explaining that the consequences of the debt on bond markets is not some sort of “forecast” which are usually wrong at best and dangerous at worst but more of a maths problem. With the added political gotcha that AI investment will be competing with federal debt and Trump’s hands are tied to curtail AI capex because it is keeping his economy afloat. I’ve been preparing my portfolio for a couple years to have 1/3 (headed to 40%) in short term t-bills that I roll over - lying in wait for 10 years to hit 6% so I can load up and enjoy the cash flow amidst the chaos. You’ve helped me greatly with the thinking on this plan. Thanks.
Great article, as usual!
Knowing your not a financial advisor, what could be ways to play this?
Gold, Silver, BTC, i get.
Everything you have to dig up (oil, refineries and their output, metals, rare earths, …) as well.
Anything else?
Shorts on S&P, Nasdaq, AI?
Dutch Bulbs should round things out nicely. (They have to be dug)
No different than BC.
Food
6% or better are long overdue in my observation. 10 year has been sitting at some variation of 4% for over 20 years.
My curiosity in watching and learning about all of these market mechanics is this..was there such market participation and intervention by these agencies before Bernanke and the start of QE.
lol … the Dildo plan 😂👏🏻👏🏻👏🏻
You have a way with words, Chris 🔥
They all hate us anyway, let’s drop EMP bombs over Teheran, and all along the north side of the SOH. Bandar Abbas etc., and open it up for good. That will solve everything, no?
It would appear this will be passed off to the children. Sad, they've been enslaved before life even begins.
After WW2, starting in 1942, Chris is correct the US bought 75% of our own bonds driving yields to 2.5% on the 30 year. It also drove inflation to 18.1%. Gold and Bitcoin have only begun to respond to the world's greatest ponzi - the US dollar.
That interest rates are rising is in direct correlation to world wide economic conditions and market forces for commodities. In the case of oil, it's more of a refinery capacity problem.
Seems we had a 35-40 year long bond market rally with the latter third propelled by Fed interventions. But like all rallies, they are suspect to cycling. We are now in the downward stroke and the silly Fed is becoming more and more clueless and incapable.
Why would I buy a 6% bond when true inflation is 4-5% and rising? The US is cutting its own throat by engaging in useless wars which gobble up dollars and wreck havoc on supply systems. But that's the irrefutable stupidity of government. Blame it on the Russians, Iran, or Martians.
Maybe in a few years, the 30 year bond hits 7-8% or higher. That is not extremely outside of the historical average. The quicker the system blows up, the sooner it can be replaced with something more reasonable. The delay will only make the implosion that more forceful.
True inflation is closer to double digits.
One reason the USA can run nominally large deficits is due to the fact that the debtors (taxpayers) have substantial assets backing the debt. After I retired I exchanged one asset - cash - for another - the equity in my home - by using the cash to payoff the mortgage. My net worth didn't change but I eliminated the interest expense. I guess that is the point; the interest expense is the problem not the level of debt.
BTW - I like receiving 4% to 5% in a money market, CD or TBill.
Yes but M2 supply growth of 8.5% means you are losing 3.5 to 4.5 % in real yield. Buy AU....
OMG!!............. the "dildo" plan →PERFECT!!
DILDO! 😂
Wow. OK I get it.
That wasn’t a real picture? I bet even Treasury economists have a sense of humor.
I mean, when the entire body of thought is a joke, at some point it’s tooo hard (no pun intended) to pretend.
OH well. They could call it that & probably nobody would notice or care.
Drug use and Youtube stardom, cage fights, MMA, house flipping, side hustles, Ponzi schemes, sports betting, Only Fans, if you can survive to Sunday it’s church for 2 hours. Just to hedge.
Life in Americaaa.
P.S. I think they’re going to have to bail out AI on the alleged ground of national security. They can’t let the industry die it’s natural death and if they can tie it to Military Weapons Programs and Our Adversaries and China! Look! they may shut people up long enough. To put the DILDO in.
Does the banking crisis resurface as we head to 6% yields? Would that be the trigger to Fed stepping in?