Monday, July 5, 2021

Quote and Chart of the Day: Uncharted Territory...

Numerously herein of late we've stated that the debt and interest rate setup, and what we believe the Fed virtually has to resort to in their attempt to facilitate massive government deficits without piercing debt and asset bubbles, takes us to the 1940s playbook.

Here's from the Journal of Economic History:

Not to mention, the last sentence of the above quote notwithstanding, as I stated in our latest video commentary, there'll be no remedying the present ~130% debt to GDP ratio without a notable dose of inflation going forward.

And, lo and behold, by 1951 (circle), indeed, we were back below 100% debt to GDP, and declining.

US Federal Debt to GDP 1940 to present.

Yes, and alas, per the upper right corner of the chart, we're now in uncharted territory!

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