...this is why you can't afford to let inflation out of control.
...Trump is playing with fire.
...the worse part is that when he replaces Powell with his stooge next year, he will make the Fed suppress rates even in the presence of higher inflation. He can do that, but the bond vigilantes will keep him honest.
...you see, if the US allows its inflation to go uncontrolled via loose monetary policy, it sends a signal to bond holders worldwide that the US administration is prepared to let inflation go wild, and higher inflation reduces the value of bonds when they mature years later, so they sell en masse and drive yields high notwithstanding the Fed's rate suppression.
Here’s a chart of 10y yields from 1981-2006 when the US debt (supply of treasuries) increased approx 10x
Think about how much QE the Fed did to get yields to go from 15% to sub 5%
