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The Fed Can't Save This One: Why Bonds May Break the Stock Market in 2025

31 pointsby abstractwaterabout 1 month ago

3 comments

treebeard901about 1 month ago
I&#x27;ve been following this the past few years and have tried to warn about it. The article does a good job explaining the problem. There are other factors and sources of liquidity they can use to cook the books a while longer. Never underestimate their ability to kick the can down the road or rob Peter to pay Paul.<p>How this isn&#x27;t front page news every day is beyond me.<p>The U.S. has run on debt to keep up the appearance of competing with China for decades While behind the scenes, it has all just been a money game to simulate GDP. As they ran up trillions doing this, they began to favor quoting the resulting debt in terms of percentage of GDP. At the same time, GDP at increasingly large levels was the result of the debt being created. This is a path where eventually reality sets in and suddenly you&#x27;re not at 130% of GDP. You&#x27;re at 250% or 300% because most of your GDP for twenty years has been this QE money.<p>The debt was funded partially by the reserve currency system which leads to trade deficits. China did a study that said for every $100 in goods sent to the U.S., it costs $0.17 cents for the U.S. to print a $100 bill (really free with digital currency). So at some point that trade deficit and foreign owned debt is a large part of your reserve currency.<p>The triffin dilemma is turning into a slow motion financial nuke. Because once the reality hits the market that the upcoming $9 trillion this year and $27 trillion over the next few years simply cannot be rolled over without either a massive crash or a form of hyperinflation, because the Feds QE will be the only source of liquidity.<p>Then again, maybe it&#x27;s time for another Bretton Woods style conference. The U.S. might not like the terms the rest of the world decides to set for it.<p>EDIT: As far as using debt fueled fiat currency to trade for goods, or to fund wars to destroy Russian tanks, or whatever, I mean, it makes sense that the U.S. did that for as long as possible. Who wouldn&#x27;t? But great scams don&#x27;t last forever
Havocabout 1 month ago
We could start by not intentionally breaking things
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duxupabout 1 month ago
It sounds like a recipe for the double whammy of recession plus inflation.
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