Just musing, but this makes sense to me?
Here is the equation that Trump has created that will do such great destruction to America.
Contrary to what Trump is claiming, companies and countries are fleeing the US, just like they have fled Russia and for the same reason: too much debt, irresponsible fiscal policies, potential inflation, criminality, tariffs, instability and a weak rule of law they cannot depend on.
And in both countries,oligarchs, and criminals are in control of so much of the economy.
So now imagine we devolve into a serious recession, which looks likely. That will cause our GDP to fall precipitously, and along with all Trump's cuts to the IRS, reduce income greatly, which will balloon our debt, and make it impossible to pay our debt, per se.
But the fed knows this, and cannot allow it, so what is their way out?
Stimulate the economy any way they can like with cutting the fed funds rate, which Trump wants to do today, and devalue the dollar, which will cause great inflation, so we can inflate our way out of the debt.
And I think the central banks and countries see this as a probable scenario, which is part of why gold is rising.
Canada sold 57 billion of US bonds in just one month. They are getting out, as well as many other countries.
And so how do we fund our debt when our traditional allies flee?
JM guess |
