Artis Real Estate Investment Pref Shs Series E T.AX.P.E

Us government will run out of pandemic money

[Torontojay]

By the second half of the year. Janet Yellen will feel the pinch after her pandemic relief fund is depleted. This is going to push short term yields higher especially if she wishes to finance the deficit with t-bills. At the same time Qt is happening and will continue to drain liquidity in the markets. How can you cut rates if yields are pushing higher? 

Let's go over what the US government can do. 

There are 2 ways to trim the deficit 

1) increase taxes 

2) cut back on spending 

As we see happening in Canada, they decided to increase the inclusion rate on capital gains. It is rarely the case that governments are more efficient than the private sector with "your" money. This will be another failed policy error by the Trudeau government. The best option is for governments to stay away and to be as small as possible. Most job creation in North America is coming from the government to hide the fact the economy is struggling. This type of spending is not sustainable and can end in a debt crisis doom loop. Efficiency helps to bring down wage inflation and hence overall inflation. How is the government any better at innovation or efficiency than the private sector? They are not which is why the best thing for them to do is stay out of the way.