The smart mmoney is on rates staying low for a long time which shows you just how powerless the Fed is right now.
They would LOVE to raise rates. They can't.
lol? whut? Stop talking about government debt, it's a stupid talking point used to beat people over the head with who want to govern by misleading voters into believing that government debt is the same as household debt.
Also, what weak economy? Economic growth is up, wages are up, unemployment is down, personal debt is down. The only thing that is currently "weak" in the US economy is our JIT supply lines, and that will work itself out eventually.
> Stop talking about government debt, it's a stupid talking point
Said not a single respectable person in economics or finance ever.
There's no real alternative to stuffing money into Treasuries, so it's kind of a moot point right now.
Agree with this take. The GDPNow estimate for Q4 growth is 8.5%. A lot of this seems to be getting lost in the politically obsessed back-and-forth.
That usually happens in the beginning stages of high inflation scenario.
Also government debt is not the same as household debt, however it still matters especially at these high levels. There is a breaking point just no one knows where it is. 300% gdp? 500%? 700%. At some point it will break down.
The only two things that can actually make the system collapse in the next 30 years are:
- a communist revolution in the US (this is not happening anytime soon, do not worry).
- zealots with a debt fixation, who would rather collapse the entire economy because they think debt is immoral. This one is a little bit more likely, but given the strong ties between the financial sector and the political parties in the US, I really doubt these people would ever be in charge. Republican, when they don't control the White house, are prone to rant about how debt is unsustainable and should be reduced at all cost, but whenever there is a Republican president, the debt keeps rising.
Also, there is exactly zero historical instance of hyperinflation caused by public debt labelled in a country's own currency. Zero.
There's little rational reasons to believe public debt will cause hyperinflation, and as I mentioned above there are in fact powerful effect acting in the opposite direction.
The only reason people make the link between those two is that hyperinflation is the canonical example of an economic catastrophe and because people believe debt to be immoral, it must lead to a catastrophe in the end. This is a religious/moral discourse, which has no link with the actual world.
And to conclude, keep in mind that high level of public debt is a political decision (borrow from the wealthy instead of taxing them) it would be quite straightforward to fix (with the 60s income tax level) but it's in the interest of no-one with a bit of political power.
For the record: most of inflation comes from rising costs in the supply chain (from supply issues, resources scarcity and/or wage raises). This is where we are now.
There exists instances of hyperinflation related to debt (Weimar republic's for instance) but this was due to debt labelled in a foreign currency (basically gold in this case).
Yoy 6% for october. Inflation is already up. What are they waiting for? 10%? 15%?
Also Powell isn't Volker by a long shot. I don't recall the Volker pivot because a few traders weren't having a good day.
You realize that this figure was only calculated a few days ago, right? What reaction time do you expect?