Westhaven Gold Corp. V.WHN

RE:RE:RE:RE:An opinion only

[Crashcomingsoon]

I agree that the Fed is in a bind; Crush the economy or let inflation run.  The Fed has no control over the main drivers of inflation which are supply side issues: Covid, labor shortages, war in Ulraine, supply chain disruptions, government spending, climate change, Chinese lockdowns.  Something is going to break to precipitate the next financial crisis.  Reversing 35 years of Fed bubble creation comes at a big price.  And watch the sovereign debt explode higher:

Rising Interest Rates May Blow Up The Federal Budget | ZeroHedge

My Comment:  Of course, it's not just rates, that will increase the deficits because a recession will mean lower revenues which means higher deficits and it applies to all sovereign debt, not just US.  I'm expecting $2Trillion US deficits for several years and for the national debt to reach $40Trillion by 2026.  In the meantime, the Biden administration keeps finding new ways to increase the deficit (student loan forgiveness, war in Ukraine, gas tax holiday, etc.)

Excerpt:
If Treasury rates continue to rise, and rise precipitously, the effects on congressional budgeting will be immediate and severe. Even if we laughably assume total federal debt remains static at around $23.8 trillion (the publicly held portion of the $30 trillion), interest rates of merely 2 or 3 percent will cause interest expense to rise considerably. Average weighted rates of only 5 percent would cost taxpayers more than $1 trillion every year. Historically, average rates of 7 percent swell that number to more than $1.5 trillion. Rates of 10 percent—hardly unthinkable, given the Paul Volcker era of the late seventies and early eighties—would cause debt service to explode to over $2.3 trillion.