Bond Market Rocks The Richter Scale

Of course, we are only talking about government debt here. Spiking rates on the record amount of corporate debt, along with the real estate and equity market bubbles, will be absolutely devastating.

This brings us to one Annie Lowrey, staff writer for The Atlantic and author of the book “Give People Money.” I mention her because she is a torch carrier for the Modern Monetary Theory movement and is an apologist for Universal Basic Income. Regrettably, this is now something our government is fully embracing. Her claim is that the government can send people checks with impunity because inflation has not been a problem for a generation, and so most have no memory of it. Really? Just because most have no memory of inflation doesn’t mean it can’t exist. Hence, she concludes we should not be worrying about a problem that we simply do not have. Well, to that, I say the Titanic didn’t have a problem with ice burgs for a while either.

Ms. Lowrey must not know about surging home prices that are once again pricing out first-time home buyers. She is also blind to skyrocketing stock values that are at all-time high valuations and bond prices that have reached the thermosphere. Indeed, asset price inflation has become intractable. And now, consumer price inflation is about to follow. This is precise because MMT and U.B.I. are becoming entrenched in the economy and putting money directly in the hands of those same consumers, but without a commensurate rise in the productive capacity of the economy.

What this all means for the markets and the economy is clear: we will be experiencing chaotic swings between inflation and deflation with increasing intensity over time.

My friend John Rubino put the current state of affairs succinctly:

“So here we are “Capital D” Depression if governments rein in their spending and borrowing, and a spike in interest rates followed by a Depression if governments continue on their present course.”

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Michael Pento is the President and Founder of Pento Portfolio Strategies, produces the weekly podcast called,  more

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