As bond yields continue their quick march upwards, inquiring minds want to know how a fiat currency regime plans to square the circle of exponentially rising debt and exponentially rising debt service costs.
In a much worse scenario, the next steps would need action by the Federal Reserve. One would be buying long-term bonds on a large scale, similar to the 1961 Operation Twist. The other would be putting an outright cap on long-term yields, which the US has not done since World War Two.
Ultimately, the only way to fix the debt problem is by cutting spending, said Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University. “Congress needs to do a fiscal adjustment. Austerity, in other words. The Fed can’t do it alone.”
But we all know that John Q. Voter will pummel any politician who threatens to limit his access to free stuff.
I agree with Veronique de Rugy, major cuts to spending, but we all know that won’t happen. My motto in life has always been “Do not spend money you do not have”. It means I have saved for vacations, saved for good furniture, saved to buy my first house – I have experienced a lot of “deferred gratification”. I have not suffered.
Don’t worry, you have a share of the public debt too!
“But we all know that John Q. Voter will pummel any politician who threatens to limit his access to free stuff.”
true. to a point.
but then economics behaves kinda like physics, certain inviolable ‘laws’. with physics the points at which the laws kick in are very precise and measurable. not quite so with economics. but they are there.
and they will manifest. generally one rule of thumb, the longer an adjustment takes to happen, the harsher it will be. hunker down folks, get the h-e-hockey schticks OUT of debt for starters and learn what you can about surviving hyperinflation. and that thing about ‘buy gold’ BE LEERY in that gold may be outlawed as part of the new digital command economy.
Bottom line, try and protect yourself from all levels of government.
Gold cannot be eaten, it cannot be smoked nor can it be used to clean your nether regions. It has limited value when barter becomes great again.
As long as you have something to barter….
Lead is far more valuable.
This time is somewhat different. The reason is global demand for stablecoins. Those stablecoins are denominated in US dollars, and backed by short term paper. You should check this out.
It is anticipated that short term paper will rise in global demand, lowering the short term interest rate. The yield curve will steepen. That steepening of the US yield curve may/will increase global rates and add pressure to other countries. If they don’t respond, their exchange rate will take a hit.
With the establishment of tariffs to control currency games from other countries, the States should be in good shape. Other countries will not be so lucky. If you keep your elbows up, you lose peripheral vision.
nope. l disagree. because *no matter* how ‘healthy’ the US economy is, the debt will begin(?) to grow exponentially and WILL at some point bring — everything — down WITH IT.
insurmountable debt —> hyperinflation aka lesson of history
You are on one side of Yogi Berra’s “Theory/Practice” concept. I am on the other side of that coin.
In today’s world, competitive forces dictate that you exercise prudent levels of leverage. There is a sweet spot.
I get lost in the details, but it boils down to there being a set amount of production and services. The only real variable being the tokens in which the value of those are denominated.
And a complex system of theft that manipulates those tokens. The prime recipients of that racket being central banksters and their friends. Followed next by entitled public sector union leeches with indexed pensions.
By the way, I’m enjoying today’s posts, but please, stop calling me “Cliff”.
So how are they going to deal with it? Well in Canada we have the best guide ever leading us with all the credentials who saved us in 2008! ( I really think those diplomas should be hung in the bathroom where they could be useful…) We have seen one of the ways they are dealing with it -inflation. I think also you should listen to Christine LeGarde – she is mapping out their intentions and Carney is jumping on board and throwing away the lifejacket. They fully intend to “invest” anything you have accumulated. After 12 years of build back better and stronger and many investments we can see the results. They will either move it or tax it. Of course , digital is coming. Carney will continue to be incredibly generous – with other people’s money. I have struggled to find any projects with any actual progress and then I recalled we have a spaceport !!! My conclusion is we can expect progress at speeds never seen before in Carney’s and Liberal’s area of expertise -Laundromats !!!!
The ‘spaceport’ is a total shitshow. Like everything else Trudeau/Carney promised
How many rockets have they launched from that concrete pad that doesn’t seem to have any control bunker, water deluge system or even a tower?
Is it more or less than what was launched at BALLS34 last weekend?
https://tripoligerlach.com/
” … how a fiat currency regime plans to square the circle of exponentially rising debt and exponentially rising debt service costs.”
It doesn’t.
P.S. -It’s really impressive that all the gold was sold and we don’t use steel! Genius I say!
Well … sure … cut Federal Spending. I’m all for that as it won’t impact my life whatsoever. Or will it? One only needs to look at the mass riots, violence, and “protests” in France … ostensibly because the State isn’t spending enough on schools and education … right? And there have been mass riots in France, repeatedly, anytime the government announced an austerity program.
So we are all caught between the millstones of high inflation and austerity revolutionaries. What these socialists don’t understand is that their demands are fueling inflation … so the more they demand free stuff … the more it costs them. Oh well, nobody ever got wealthy by overestimating a socialists intelligence.
Why are ye fearful, O ye of little faith? The spirit of turdo has arisen, harnessed the winds and the sea; and there will be a great calm.
Haven’t you seen the ads?
Sing! After me!
Bobblehead Loves me
This I know
‘Cuz Rick Mercer
Tells me so.
I always find it curious when so-called conservative investors … for example: a man who was hailed a hero of the Subprime Mortgage crisis … a man who runs a $900M hedge fund … really HATES anyone owning a home in HIS neighborhood.
https://www.eastbaytimes.com/2026/09/30/group-sues-to-block-development-of-25-homes-on-saratoga-hillside/
How DARE a builder-developer build superprime mortgaged homes in a State and a region with a severe housing shortage … right? A die hard NIMBY who GOT HIS … but refuses others his slice of nirvana.