RE:RE:RE:Whats the agenda...
Thanks for the video Frankie.
In a nutshell, the US is doomed either way.
Here are some of the things I thought should be highlighted from the video.
- The US created an everything bubble after the pandemic to help lower the deficit after the covid spending spree.
- a raising $ US created a sell off in long term treasuries which pushed 10 year yields to ~ 5% in October 2023. This is inflationary.
- a rise in gold and oil is inflationary to the US as these assets have to be purchased in $US which drives up the currency and pushes yields higher. This increases the government deficit even further through higher interest payments on treasuries. Gold is traditionally viewed as an inflation hedge and so market participants in gold are hedging their bets on the inflation war.
- the government is coordinating through other partners to weaken the dollar which will help lower the deficit. A weaker dollar creates inflation on imported goods coming to the United States but it helps the government pay their bills.
- Janet Yellen has been strategic in every step of the way. She used the TGA to her advantage during the debt ceiling fiasco and through the reverse repo market to finance the deficit. This negated the effects of quantitative tightening by the Fed.
- higher or lower interest rates will cause more inflation. My counter argument to this is that a recession will put an end to this either way.
- Nominal gdp growth is ~ 5.8% and the deficit is 6-7% of gdp. If the US government decides to balance the deficit, then nominal gdp would be 0% at best and the economic fallout would be much worse than the GFC.
A great video and a truthful account of what's going on out there. Unfortunately I see many people turning a blind eye to the situation.