This is NOT a parody news article!!

It was actually published as 'real news' .

From a thread on the politics board:

The interest on the US national debt is already at $1 trillion per year.

As more older debt matures and needs to be refinanced at the new higher rates, the projected interest payments increase to between $1.2 trillion to $1.6 trillion, depending on if the Fed cuts rates and by… pic.twitter.com/3ZORUuPxGI

— Wall Street Silver (@WallStreetSilv) April 7, 2024

Inflation.

Red Pear Realty said:

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From a thread on the politics board:

The interest on the US national debt is already at $1 trillion per year.

As more older debt matures and needs to be refinanced at the new higher rates, the projected interest payments increase to between $1.2 trillion to $1.6 trillion, depending on if the Fed cuts rates and by… pic.twitter.com/3ZORUuPxGI

— Wall Street Silver (@WallStreetSilv) April 7, 2024

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Remember that the FED will run a cumulative deficit called "deferred assets" on their balance sheet. They have absolutely no requirement to do anything as they can let that number dip as low as it wants.

Where the issue comes in is with the treasury. In the most bullish case, the FED admitted that there won't be remittances to the treasury until 2029 at the earliest. And we are already breaking from that case. It's probably up to early 2030's already in a best case scenario.

So the treasury is getting nothing from the FED. The only place the treasury can now get money from to cover WHAT THEY HAVE ALREADY SPENT, and what they want to spend new money on, is through tax revenue and issuing new treasuries with the FED buying them, expanding their balance sheet. They can do that at these rates, higher rates, or lower rates. Though as you point out, without lowering rates, they would dig their hole exponentially deeper and kick the remittances down the road decades.

But if the FED were to lower rates, it would be catastrophic for inflation. 2022 will seem like a blip on the radar. Hyperinflation will ensue.

Like I've said for over a year now, the FED can't do anything without getting directly blamed for what breaks. So they will wait for something to break to first, and then they will act based on what bond yields are doing. If they are rocketing, the FED will raise. If they are tanking, the FED will lower.

Red Pear Realty said:

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Señor Chang said:

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Any updates on inflation? Is it down yet?

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Just wait until they have to drop rates to service the debt. Then the real fireworks kick off.

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And what this will do to housing prices, college tuition...?

More free money will cause another run-up in housing prices, with investors looking for a safe haven.

Would landlords with capital be willing to rent homes cash flow neutral or slightly negative in order to make money in equity?

Anyone heard from OP on this? Not trying to rub his nose in it, but am genuinely curious if anyone can defend the original premise at this point.

Not arguing that the original premise can be defended. I'd just love to see the rationale behind someone trying. It's somewhat fascinating to me how people can rationalize themselves into an argument that flies in the face of simple economic theory around supply and demand. You can not flood an economy with printed money and not expect inflation. Period.

I think we are tracking for a repeat of 1970s style inflation. Round 2 will be worse than Round 1, and it's going to last for another few years, at best, if we can pull out of the nosedive we are in now. If we aren't lucky, God help us. And when I said this was going to last several years at best (three years ago on this thread), there were definitely some folks here who incorrectly called me out. Would be nice to see not an apology to me, but rather a change in voting to do something about it for the betterment of the country.

leoj said:

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YouBet said:

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I don't have a problem with Red Pear's take on inflation. It's reality.

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4-5 years of 6% inflation is reality?

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Yep.

Oldag2020 said:

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Bump

https://www.cnbc.com/amp/2023/12/13/fed-lowers-inflation-forecast-for-2024-seeing-core-pce-falling-to-2point4percent.html

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OP will show up in 5 years to brag about how he was right all along. Calling it now.

SteveBott said:

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To the OP's point

https://www.cnbc.com/2021/07/11/ron-insana-the-bond-market-agrees-with-the-federal-reserve-inflation-is-temporary.html?utm_source=facebook&utm_medium=news_tab&utm_content=algorithm

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Never saw this comment from page 1. Man, couldn't have been more wrong..

OP, inflation still good for me??

Red Pear Realty said:

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Modern monetary theory (MMT) posits that you can because it's all just pretend play money anyway. And since it's just pretend money, they make us pay taxes to make us remember who is in charge.

The definition of inflation is expansion of the money supply. Period. The end. If you take a pizza and cut it into more slices than the last pizza you made, it takes more pieces of pizza to get you full. You aren't full on the same number of pieces any longer. That's inflation. I don't care what the media says, or what the White House says (no matter who is in office), or what the useful idiot professors are teaching in economics classes.

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I agree and when people try to twist themselves into a pretzel arguing otherwise, it reminds me of Enron and Arthur Andersen since that happened early in my career and I knew people closely involved. I've seen very smart people time and time again think they have outsmarted the system when a 13 year old can take a step back and quickly point out that something isn't right. But the power of rationalization never ceases to amaze me.

Again, it's probably more of a psychological fascination for me into the way people operate.

Red Pear Realty said:

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I think we are tracking for a repeat of 1970s style inflation. Round 2 will be worse than Round 1, and it's going to last for another few years, at best, if we can pull out of the nosedive we are in now. If we aren't lucky, God help us. And when I said this was going to last several years at best (three years ago on this thread), there were definitely some folks here who incorrectly called me out. Would be nice to see not an apology to me, but rather a change in voting to do something about it for the betterment of the country.

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Volcker was needed to pull us out of the 1970's spiral. To date nobody has demonstrated the guts needed to do that.

Aglaw97 said:

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Red Pear Realty said:

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I think we are tracking for a repeat of 1970s style inflation. Round 2 will be worse than Round 1, and it's going to last for another few years, at best, if we can pull out of the nosedive we are in now. If we aren't lucky, God help us. And when I said this was going to last several years at best (three years ago on this thread), there were definitely some folks here who incorrectly called me out. Would be nice to see not an apology to me, but rather a change in voting to do something about it for the betterment of the country.

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Volcker was needed to pull us out of the 1970's spiral. To date nobody has demonstrated the guts needed to do that.

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If austerity is tried at some point in the future, it won't be the 70's repeat, it will be the greater depression. And sadly, it's exactly what's needed to get the country back and for our kids and grandkids to build back and have a healthy economy. But it would come with immeasurable pain for every single person in the process. We're talking unwinding of every dollar that's been thrust into the system since 2009.

Red Pear Realty said:

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I think we are tracking for a repeat of 1970s style inflation. Round 2 will be worse than Round 1, and it's going to last for another few years, at best, if we can pull out of the nosedive we are in now. If we aren't lucky, God help us. And when I said this was going to last several years at best (three years ago on this thread), there were definitely some folks here who incorrectly called me out. Would be nice to see not an apology to me, but rather a change in voting to do something about it for the betterment of the country.

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