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Tim S.'s avatar

Mehdi is a verbal surgeon. I love listening to him speak, which is the main reason I subbed to Zeteo. He explains this passionately, yet in a way that even a 'random Joe' like me can understand. I really think he 'gets it', and always appreciate his insights!

Protect the Vote's avatar

Cheeto’s Spendthrift Economy

Many commentators on the US economy as well as economists have for the last 8 to 18mo and longer have been sounding the alarm over the growing national debt. Now with the Iranian war the debt is over $39T and growing. Cheeto continues to recklessly spend thinking that a war time economy may bail him out. Of course Cheeto, who drove businesses into the ground going bankrupt 5 times, is now in charge of the upcoming Great Depression 2.0 and will botch its management much like he did COVID. His inability to manage anything was apparent during COVID since he has no mental discipline and relies on “gut instinct” to guide his management.

Potential foreign investors who help pay for our debt are becoming risk adverse. HSBC, the second largest European bank, is now sounding the alarm(https://bit.ly/42Tl15s) implying that foreign investment which now amounts to $40-50T in T bills will need to be compensated for the risk they take on. This means that the yield on treasuries will have to go higher, meaning that the US will fast approach a point when the country will not be able to afford its debt, creating a defined debt trap which occurs when the rate of increase of outstanding debt accelerates faster than the tax revenue to cover the interest cost.

5% is the magic number for 10y T bills. It is the level where the debt is unsustainable without default.

The Fed has two tools in its toolbox, interest rates and money printing. In this precarious financial situation those tools do little to help in the long run particularly with a reckless overspending Cheeto government.

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