I have gotten a flood of emails and text messages asking about what happens if Biden defaults on the US debt. In short, Biden has made a career out of spending money, as has Speaker McCarthy. They both have an incentive to raise the debt ceiling, but whether it is cuts to Biden’s insane budget (higher than Covid-era spending) and wants to raise taxes on the middle class to pay for it. McCarthy wants a trimmed budget (aka, back to pre-Covid spending levels) and NOT raises taxes. They will eventually agree somewhere in the middle (US Congress member Pramila Jayapal will be outraged, but then again, she is ALWAYS outraged like Senator Elizabeth Warren) and AOC.
The Federal Reserve has taken a brief respite from fighting inflation that they helped cause. But with $188 TRILLION in unfunded entitlements promised by politicians, The Fed will undoubtedly start buying assets again (aka, QEInfinity) and the debt ceiling will keep being raised. In essence, the DC merry-go-round is broken and politicians will keep pushing it around until it collapses.
For the moment, The Federal Reserve is reducing M2 Money (green line). With it, the US Dollar (blue line) has declined. Gold (white line fever) is on the rise along with The Fed’s effective funds rate.
WTI crude is up over 1% this AM. And gold is up 2.29%. Heating oil is up 3.56%.
Face it, I have no confidence in Treasury Secretary Janet Yellen, one of the biggest propronents of MMT (modern monetary theory or borrow and spend without consequences). Yellen is NOT making lose my blues.
Cryptos are down this morning across the board.
