Weening the market and Americans off of easy fiscal and monetary policy will be no easy task. The Biden Administration’s proposed $1.9 Trillion COVID relief package is the first of two multi-Trillion debt-funded “stimulus” tranches to come in 2021. Between zero interest rate policy, debt-funded fiscal stimulus ($1,400 in direct payments to Americans plus extended unemployment benefits), Quantitative Easing and Fed asset purchase programs, we are creating enormous moral hazard, applying downward pressure to GDP, expanding the debt bubble and creating inflation across asset classes. We believe inflation could reach the upper band of what is acceptable to the Fed before 2023-2024 and that Chairman Powell & Company ought to start “thinking about” what tightening may look like in another year or two both in terms of trajectory and messaging to the market. More of our thoughts may be found in our latest podcast episode available HERE.

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