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Non-Tech : Kirk's Market Thoughts -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (11079)	3/18/2021 7:16:06 PM
From: Kirk ©	Respond to of 26583

Here is the article nationalreview.com Here’s How Much the COVID-19 Stimulus Will Cost You By KEVIN A. HASSETT & MATTHEW JENSEN March 18, 2021 6:30 AM Looks like a lot of arm waving to get to And what if the debt is never paid off, just rolled over and added to? The typical American family can expect to receive $350 less in the way of government services or tax cuts, not just this year or next, but forever, just to pay the interest on the debt. That’s if interest rates stay low — the Congressional Budget Office projects an average of 1.3 percent through 2050. With the same rosy assumption, a family with income between $500,000 and $1 million will shoulder $4,000 per year, forever. If you think interest rates will be higher, just take the liability charted above and hit it with the interest rate, and you will have a good guess for how much you will owe. and With that rule, the average American owes about $40,000 because of the stimulus. A sugar high might feel good while it lasts, but it doesn’t last long. The fiscal challenge created by the policies of the last year will be a massive weight for all of us going forward.

To: Kirk © who wrote (11079)	3/18/2021 7:54:26 PM
From: Sun Tzu	Respond to of 26583

Without exception, the Western governments (and corporations) have accumulated too much debt and are now near the end of their debt cycle. The only solution the governments have in front of them is to inflate their way out of the debt. There is simply no other viable option open to them. For example, the US (which actually happens to be one of the stronger ones) has ~$30T government debt and the businesses have about $15T (speaking from memory). If the Fed raises the interest rates to just last year's levels (which were at historic lows), it will cost the government an extra $600B each year. Where is that money going to come from? There is not enough tax revenue. There are several articles on the long debt cycle. I especially like the one by Lyn Alden. And there is a good animated youtube video by Ray Dalio. Alden goes through the history of big debt cycles and shows that without exception they have been resolved via currency devaluation and inflating the way out. I personally posted a quote on the subject on the SI favorite quotes thread from the ancient Greece to show that this is not a new problem. It's just that it typically happens only once (or fewer) in a lifetime. Of course the government could always raise the taxes, but that option is less politically viable than inflating their way out of the debt. So at least for the next 10 years the interest rates will be very low to negative. And if things get really bad, then the governments (and not just the US) will impose capital restrictions such as banning bitcoin or fund transfers to foreign nations. Anyways, what I am getting at is that hoping and wishing that somehow the Fed will do something to save the bond holder is a lost cause because they can't do that. I believe in this theme strongly enough that starting January I made DPST and TTT two of my core positions in my retirement fund.