Deficit Spending Is Expected To Skyrocket In 2021

20 US dollar banknote on plant

Source: Unsplash 

WEST RIVER, MARYLAND – Yes, Dear Reader, 2021 is going to be a doozy.

America’s money supply (M1) rose 70% last year. And it looks like the combination of the increasing supply of money and the anticipation of the damage to be done by a Democrat-controlled government might have finally turned the bond market around.

The yield on the 10-year U.S. Treasury bond – the I-beam of the entire capital structure – has gone up 20% in the last week.

It’s still preposterously low – at 1.17%. (But remember, the real yield is adjusted for inflation. So if the nominal yield is 3%, and inflation is at 2%, the real yield is just 1%. Inflation is currently 1.81%. So the current real yield on the 10-year bond is -0.64%.)

And it’s still too early to know if the downward trend in yields has come to an end.

But just to be clear about it, rising yields in an economy with $80 trillion of debt is a sign of impending doom. It becomes ever more expensive to finance and refinance the debt… requiring more and more infusions of fake money.

The locomotive goes faster and faster… until it flies off the tracks.

Democrats in Control

And now, Democrats control both houses of Congress and the White House. Since the time of FDR, Democrats have always tried to get the government to do more – more welfare, more laws, more spending, more debt, and more regulation.

They recognize that the more they spend, the more powerful they become. They regulate; they control; they subsidize this and bail out that.

And then, even the rich and powerful are forced to come before them on their knees – bearing campaign contributions, speaking fees, and sinecures – and beg them for help.

Of course, Republicans know the game, too.

When they’re in power, they are insufferable… even bigger spenders than the Democrats (perhaps because there is no longer anyone holding them back).

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