Broker chat It’s worth spending a minute considering the huge blow-out in Public Debt in the US – see charts below[courtesy of the FT]. Given the current fiscal settings the Congressional Budget Office is forecasting amassive blow-out and all-time high in the Federal Debt as a % of GDP by 2029. This is especially pertinentbecause we will have interest rates which actually cost money – funding this debt is real and a hugebudget expense and is an ongoing BURDEN on the US economy. Major initiatives to reign in the USbudget deficits and public debt should have been taken many years ago but were not and underTRUMPONOMICS nothing is being done to address this ‘elephant in the room’. The effect of this could beongoing sluggishness in the US economy, ongoing high inflation rates and the removal of a vital macro-economic tool, to deal with any downturn in the economy. If you’re a two-pistol cowboy at the O KCORRAL, with monetary policy in your right hand and fiscal policy in the left you have effectively lost ahand. And when it comes to monetary policy with high inflation rates the FEDS hand (the right one whichis left over) will be constrained as well, unless the FED wants to give-up on fighting inflation of course. Ifthey did this there would be the mother of all BEAR markets. More likely the FED would blink and haveto follow through with their inflation fighting mandate further crushing the US economy into a recession.If you think I’m just rambling on consider the title of this section. And also consider that these charts andthe opinion piece came from the FT, one of the world’s 3 most respected financial publications [theother two are the Wall Street Journal & it’s weekend publication BARRONS & the AFR].
