Tag: Federal Debt

The Fed Expanded Its Balance Sheet Amidst Tightening Chatter

The Fed Expanded Its Balance Sheet Amidst Tightening Chatter

Amidst the talk of the Fed potentially tightening monetary policy in 2023 or even next year, the Fed expanded its Balance Sheet at its fastest pace since March 17th of this year, growing assets 1.4% from the week prior. This narrative of the Fed potentially becoming more hawkish needs to be put into perspective. With … Continue reading The Fed Expanded Its Balance Sheet Amidst Tightening Chatter

The Fed’s Options To Fight Inflation Are Limited

The Fed’s Options To Fight Inflation Are Limited

The Federal Reserve has two primary tools that it may use to fight inflation: halting the printing press and raising interest rates. The first option is unlikely given Treasury Chief Yellen and Fed Chief Powell are operating in lock step. The Fed is limited in its use of the second option. If the Fed were … Continue reading The Fed’s Options To Fight Inflation Are Limited

Powell Just Told Us Why Interest Rates Will Remain Low

Powell Just Told Us Why Interest Rates Will Remain Low

“Given the low level of interest rates, there’s no issue about the United States being able to service its debt at this time or in the foreseeable future,” - Fed Chair Jerome Powell. Maintaining low rates to minimize debt service expense is top of mind with the Fed as we wrote last week and as … Continue reading Powell Just Told Us Why Interest Rates Will Remain Low

A More Hawkish Fed Is Not In The Cards This Year

A More Hawkish Fed Is Not In The Cards This Year

The U.S. Just Passed $1.9 Trillion In Debt-Funded "Relief". Now Is Not The Time For The Fed To Raise Rates. Yield Curve Control Is On The Horizon. Some expect the Federal Reserve to become more hawkish in the near-term. We don't see it. Not with $1.9 Trillion in new Government debt. The Fed will eventually … Continue reading A More Hawkish Fed Is Not In The Cards This Year

Brace for Anemic Long-Term Real GDP Growth

Brace for Anemic Long-Term Real GDP Growth

The three-headed Hydra of low labor participation, increased debt levels and higher taxes will cripple U.S. long-term Real GDP growth for decades. Labor participation is not going back to December 2019 levels. To believe that scenario is wishful thinking. For starters, 25% of restaurants and bars are permanently closed. Those jobs are not returning. Second, … Continue reading Brace for Anemic Long-Term Real GDP Growth

Long Rates Continue To Climb As Inflation Persists. Nothing To See Here.

Long Rates Continue To Climb As Inflation Persists. Nothing To See Here.

The Fed would have us believe "There's nothing to see here," (to quote Frank Drebin), as it relates to inflation. Consumer spending funded by government debt is of inferior quality as compared to spending funded by increased production. In January Americans spent their debt-funded government checks that were mailed out at the end of December. … Continue reading Long Rates Continue To Climb As Inflation Persists. Nothing To See Here.

The Fed’s Evolution From Independent Agency to Treasury Subsidiary

The Fed’s Evolution From Independent Agency to Treasury Subsidiary

We recently wrote that weening the equity market and Americans off of easy money will be difficult. We expect The Federal Reserve to march in lockstep with Congress and Treasury rather than act as the independent check on Government the Fed was meant to be. Thus, we expect monetary policy to remain loose for the … Continue reading The Fed’s Evolution From Independent Agency to Treasury Subsidiary

Tuesday’s Election Will Be Closer Than What Polls Show

Tuesday’s Election Will Be Closer Than What Polls Show

Polling should show a Biden lead going into Tuesday's general election given that Democrats have historically participated in early voting in significantly larger numbers than have Republicans. Too Close To Call We believe that Tuesday's election between two fiscally irresponsible parties will be closer than many voters anticipate. Various polls show an early lead for … Continue reading Tuesday’s Election Will Be Closer Than What Polls Show

A Nation in Decline: Total Federal Debt Is 136% of GDP

A Nation in Decline: Total Federal Debt Is 136% of GDP

U.S. policymakers have increasingly utilized debt to fund various spending initiatives without a thought as to the consequences (reminiscent of the last days of the Roman Empire). U.S. reserve currency status and endless monetary expansion have supported this debt addiction. At this rate U.S. reserve currency status is in jeopardy. The chart below depicts total … Continue reading A Nation in Decline: Total Federal Debt Is 136% of GDP