Valorantt Valorant Player With Extra Info
one piece of news that did come out
during the week that should be helping
investors to figure out this problem is
the announcement from the Social
Security Administration that it is going
to be raising the payments next year
these are the colas by 8.7 percent that
is the biggest increase in 40 years
that’s going to cost the government over
100 billion dollars so that adds over
100 billion dollars each year to the
budget deficits which adds to the
national debt how could this not be
inflationary and of course not only are
these larger deficits inflationary which
ultimately will be financed by the FED
but what do the people who receive the
100 billion dollars do with the money
when they get it they go out and spend
it so in other words prices are going up
and the government responds by printing
more money and sending it to people so
they have more money to pay those higher
prices is which means the prices go even
higher people are supposed to cut back
when prices go up but if the government
gives everybody more money to pay the
higher prices then you’re just fueling
the inflation and it’s like a dog
chasing its tail you’re never going to
catch it which is why the government’s
never going to bring inflation down and
that’s why gold needs to be going up
that’s why the dollar needs to be going
down 30-year treasury bond yields are
still a hair below four percent now
that’s the only maturity that’s still
below four percent but when inflation is
over eight percent the only reason that
30-year government bonds yield under
four percent is because the markets
still expect the FED to win its fight
against inflation once the markets
realize the FED is going to concede and
inflation is going to win then bonds are
going to fall through the floor and
Gold’s gonna go through the roof and of
course the dollar is also going to tank
along with bonds and if the Federal
Reserve tries to stop bond prices from
collapsing by printing even even more
dollars that will only make the dollar
weaker and gold stronger but again it’s
not just Social Security outlays that
are going up what about interest
payments on the national debt the
government is having to pay four percent
now to borrow money instead of a quarter
of one percent you’re talking about a
16-fold increase in the cost of
refinancing debt as it matures that has
to roll over and again what are people
who own these bonds what are they going
to do with that extra income that
they’re getting on their bonds well
they’re going to spend that too right
more money going into the economy
bidding up prices but also what about
the enormous losses now that the Federal
Reserve is suffering on its portfolio of
bonds particularly some of these
mortgage-backed Securities if the
Federal Reserve is unloading those
they’re doing it at a loss plus the
short-term interest rates that the
Federal Reserve is paying the banks are
now much higher than what is earning on
its portfolio of longer term
low-yielding U.S treasuries so the
Federal Reserve is now operating at a
loss it used to be operating at a profit
and what did it do with that profit well
it remitted it to the United States
Treasury and so that was added revenue
for the treasury which helped to reduce
the budget deficits but now instead of
sending the treasury a check the Federal
Reserve is sending the treasury a bill
the treasury has to reimburse the
Federal Reserve for these losses and
that means even bigger deficits and that
means even more inflation and in fact
not only is social security having to
spend more money because of these colas
going up but the labor force
participation rate has fallen so much
that there aren’t nearly enough people
paying into Social Security remember in
order for the government to collect
Social Security Revenue people have to
be in the labor force and working okay
the government needs young people
working and paying into the system so we
can keep this Ponzi scheme going the
problem is those young people aren’t
there working and in fact older people
are retiring earlier and so we have
smaller labor force participation rate
and so the gap between what the
government collects in Social Security
taxes and what it’s spending in benefits
is rising especially now with this new
increase is 8.7 percent increase because
wages aren’t going up anywhere near 8.7
percent that means the collections of
Social Security taxes are not Rising
nearly as much as what the government is
paying out in benefits so all of this is
adding to the inflationary spiral in
fact look what’s going on in the UK a
lot of people are worried about fiscal
Proficiency in the UK because the
government recently announced tax cuts
in the face of rising inflation you you
had a central bank that said hey we’re
going to fight inflation we’re raising
interest rates that’s a contractionary
monetary policy but then you had a newly
elected government saying hey we’re
going to have expansionary fiscal policy
we’re going to cut taxes we’re going to
increase budget deficits even as we’re
pretending we want to fight inflation
well the markets was smart enough to
realize that that was inflationary and
the British pound tank it hit an
all-time record low and in fact finally
today officially the British government
has done a complete U-turn they’ve
pivoted on the tax cuts but why were the
markets concerned well because they were
concerned about debts going up in Great
Britain well what is the British debt to
GDP it’s 85 percent now that is a big
number I mean it is a number that should
cause concern anything really above 50
percent of GDP is too big a number so
because these tax cuts threatened to
send British debt to GDP even higher
investors rightly dump the pound but
what did they do they bought dollars
they sold pounds for dollars but they
were selling pounds because Britain has
got a debt problem the irony is they
were buying dollars despite the fact
that the United States has it even
bigger debt problem our debt to GDP in
the United States is 125 but it’s
actually higher than 125 percent because
that’s just the federal debt if you add
the local which is Municipal debt and
state debt to that now you’re at a
hundred and forty percent of GDP we’re
in a much bigger fiscal mess than Great
Britain so selling pounds and buying
dollars because you’re worried that
Britain has too much debt is jumping
from the frying pan into the fire but
why are people doing that because
America’s debt doesn’t matter because
America has Reserve currency America is
the currency that you buy when you’re
worried about something it doesn’t
matter if we have a bigger problem than
the problem that you’re worried about
you still buy it well in the UK pretty
much all the debt is on a national level
so we have so many levels of debt but
all of these governments are trying to
get blood from the same turnips because
Americans are broke we have no savings
so can we possibly repay this debt of
course not repaying the debt is
impossible so what’s going to happen
we’re going to default there’s only two
possible ways we can default the honest
way and the dishonest way but either is
a disaster if you own U.S treasuries the
oddest way is just to admit that we
can’t pay and we default we destruction
the debt and we tell our creditors we’re
not going to get your money but I don’t
think politicians have the Integrity to
do that they’re going to take the
cowards way out they’re going to print
they’re going to inflate the debt away
that’s the only way out of this problem
is to monetize that debt and repudiate
it through inflation which is why it’s
crazy for anybody to believe that the
FED is going to succeed in reducing
inflation back down to two percent it
can’t succeed in fact the only hope it
has of getting out of this debt is to
inflate it away and they’re not going to
inflate it away two percent a year
they’re going to have to have a much
higher rate of inflation to have any
hope of bringing this debt down to a
manageable level in Real terms
especially when interest rates go up
because the only reason we’ve been able
to afford the debt now is because
interest rates were so low
foreign
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