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Strategies & Market Trends : The Art of Investing

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Nov 14 4:00 PM EST

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To: Sun Tzu who wrote (5327)	8/30/2022 4:16:07 PM
From: Real Man	1 Recommendation of 10599

The problem with recession and higher interest rates is that it spikes up the budget deficit. If the expectation of “Worse than 2008” that I share with Michael Burry proves correct, US will be driven into unsustainable debt. at some level of debt more of it drives collapse instead of recovery. A widely circulated paper claimed the ratio of debt (govt) to gdp at which the threshold happens at 77%. It would mean if we fall into recession, Keynesian stimulus will not get you out of recession and could accelerate collapse. At least how it works in non-privileged countries. datalab.usaspending.gov You can see huge spikes in budget deficit during recessions, the debt that can’t possibly be paid in todays dollars. So, I am not sure what coolaid Powell is drinking thinking he can drive inflation down. I think it is accelerating. So we doubled M0 in 2020. How much stimulus now? Biden will keep doing bills. What I am trying to say, Fed’s effort is pointless at this point as it can’t prevent a sovereign default (printing is a form of that) because tightening will cause private and corporate defaults which in turn will transfer bad debt to the Federal govt. Another real estate crisis may be on its way already thanks to Powell hikes. You just can’t get out of this trap easily without major pain.

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