Unemployment is under 4% and workers are getting big pay raises complicating the inflation fight. Not surprisingly the economy remains resilient. Simply inflation remains high because structural forces threaten to keep it there. His big climate law, the misnamed Inflation Reduction Act feeds inflation demanding even more debt issuances.

As a result, interest rates are at 22-year highs. As part of a quantitative tightening campaign, the Fed is attempting to decrease the money supply (M2) after four rounds of bond purchases that increased the size of the Fed’s balance sheet from $1 trillion in 2007 to over $8 trillion. And if you go back further, both Presidents Obama and then Trump too pursued spending freely, because there was no penalty, lulling investors into complacency.Īs a consequence, amid entrenched inflation, financial reality has intervened. Inflation and several asset bubbles, including those in real estate and bonds, were driven by this liquidity.

The supply of Treasuries exploded over $25 trillion or five times since the beginning of the financial crisis of 2008. Under this fiscal free lunch, interest rates went down to the lowest in history. In the US, lacking in savings, they added to an already heavy debt burden because when it came to fund those widening budgetary deficits, the Federal Reserve bought tens of billions of bonds and mortgages with newly printed money (quantitative easing), so that money was essentially free. What happened to civility? How did it come to this? To revive the world economy following the 2008 crisis, governments embarked on a tremendous spending binge during the past 16 years, with debt and spending rising faster than GDP.

November 14 ( King World News) – J ohn Ing: Why does the world seem falling apart? Wars, pandemics, anti-semitism, polarization, and it goes on. The price of gold continues trading at a record $100 premium in Shanghai because China may finally peg their currency to gold.

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