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$10 Trillion in New US Treasuries will be Issued this Year to...

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    $10 Trillion in New US Treasuries will be Issued this Year to cover gov debt (as explained in the video below).

    This poses the question: Where is all this money going to come from? There are only two options:

    1) Interest rates have to go up to make gov. bonds attractive to investors.

    2) The fed recommences QE and buys the bonds with printed money.

    Option 1 will kill the economy and the banks by making loans and repayments unaffordable. It also causes a debt spiral (and a bankrupt US gov.) because the gov. can't afford to repay the interest and this will explode the debt over time.

    Option 2 will be highly inflationary. If inflation restarts (likely) the fed will have to stop printing money and raise rates again to stop the inflation. It is also hard to see how the fed can commence QE in 2024 - unless there is a crisis that stalls the economy, crashes the market, bankrupts businesses and borrowers - and means the fed has to put interest rates back to zero and print more money to restart the economy?

    Can a crisis like this commence during an election year with a fed that is pro-Biden?

    Plan A: Maybe not? If inflation drops to the target rate the fed could cut rates just before Yellen issues new short term bonds. This will cause the yield curve to invert further by causing long term rates to go down and short term rates to go up and kick the can further down the road (2025 crash?).

    Plan B: Maybe yes? The ducks are lining up! China is crashing, the rest of the world is in recession, bad commercial real estate loans are due, the market is topping out, conflicts & higher costs are happening, fed's BTFP ending, fed can't cut rates with unemployment low & GDP high, etc. So, they might think they can have the crisis now and recover before the election, which is 9 months away?

    It is possible they have not decided yet between Plan-A & Plan-B? But we should find out soon!

 
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