Get something from the debt before it breaks.

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via @OccupyWisdom :

1/ The reason that Pres. Obama was able to take the Fed debt from $10T to $20T with no problem was that rates were 0% for six years. If nobody comes for their principal you can make all the $0 dollar interest payments you need to and borrow unlimited funds. The problem is

2/ that the free money was used to inflate asset bubbles (paper gains). The thinking was that the paper assets could be used as collateral – that would lead to lending/borrowing, consumption and increased GDP. That plan obviously failed. Pres. Trump gets elected AS A RESULT OF

3/ a 10-year secular depression. He needs growth. The problem is the consumer is broke, debt is too high (corporate/household) & the Fed was suddenly in a rush to take away the punchbowl by hiking 8 times into an obviously weakening, depressed economy. To try to keep it going we

4/ pass Tax Cuts & earnings explode, but the Fed kept tightening. Growth went back to a depressed trend as the Fed began QT (burning liquidity). December 2018 the wheels literally began falling off. The economy was stalling, markets were in free fall & a recession within the

5/ depression was imminent. Now the President sees interest rates higher/liquidity being reduced, as we’re weakening & wonders why China was smart enough to create a credit bubble to build tons of ghost cities/infrastructure/manufacturing/islands/trains/tons of gold etc. while

6/ our country is crumbling, airports are awful, roads are turning to gravel as we spend trillions on nonsense. He knows that organic growth is impossible in the immediate term, so now it seems as though borrowing for infrastructure, inflating away debts, & ensuring the

7/ free money continues to boost asset prices will be enough to keep the economy growing at or above trend (3-4% GDP) is better than allowing the economy to revert back to 2% depressed growth. The flaw in Keynesian thinking is that while inflation (money printing) eases the

8/ indebted consumer/corporation/government in debt terms, it also hurts them with increased costs (oil, groceries, education, housing). So now it seems the idea is to ease PRIOR to a recession, rather than reacting to the recession by easing. Spend trillions at 0% interest

9/ rebuild the country while people will still buy our bonds. Inflate away the debt while pumping paper assets to the moon. Let consumers go wild with low interest rates. Get something from the debt before it breaks.

 

 

 

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