RE: HBR - Outstanding Results24 Aug 2023 14:23
Debt repayments for the US are currently c4% of GDP - will be 5% of GDP at the current 4.2%+ on the 10-year.
50% of that $32 trillion+ debt matures over the next 2-3 years - whoops - Gold is sniffing that out right now of course and the banks prepped for it in 2017 via Basel III making Gold = cash on their balance sheets.
Add the current trillion Dollar per year trade deficit (likely worsening unless and until the Dollar is dumped) and ultimately, the US economy is 90% of its GDP in reality - at best - the other 10% is being raped by banks and/or haemorrhaging with Dollars leaving the country for imports.
Only by increasing the tax base - via inflation cos they're never growing from here - can those increasing debt repayments be satisfied. Under no circumstances can inflation be allowed to drop to 2% or less or for their to be an actual recession in nominal number terms (in real numbers we've already been in huge recession for years but hey, inflation is useful for hiding stuff like that from the plebs ...).
Increasing rates *can* slow inflation but as it increases the cost of money, it can also increase inflation - it's not black and white.
The US economy is 70% consumption - as referenced, with 7%+ 30-year mortgages, Discretionary Spend, as mighty as it has always been in the US, is being decimated and that decimation is a large majority of the US GDP.
They cannot continue at 70% consumption, they're going to have to start making stuff again but to export that you're going to need to kill your currency but you also need more inflation to keep the debt wolves from the door.
Fortunately, killing the Dollar will achieve both of those things - sending oil sky-high again will also help with the help of those oh-so-naughty BRICS chaps who secretly have the US (bank's) blessing to take the blame for all the grim things that need to happen for the US to survive.
Dips and bumps along the way of course but I'm pretty clear on how this picture will look over the next 5+ years.
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