Uncle Sam's embarrassing bar tab of debt is now racing at a rate that far exceeds his GDP, pushing the deficit to GDP ratio toward 8% and higher-ratios we've never seen except during the GFC of 2008 and the "COVID" crisis of 2020.
From Debt Spiral to Super QE. If recent memory serves me correctly, in both of those embarrassing years, what followed was QE to the moon and the ongoing fantasy that every debt problem can be solved with trillions of fiat dollars mouse-clicked out of thin air.
As to basic math, one can have their own opinions but not their own facts, and the facts tell us that the current cost of servicing the aforementioned debt is 16% of Federal tax receipts.
As the former head of European block trading at Goldman Sachs, Alex Harfouche, just warned, these sickening debt ratios mean the US economy's ability to shoulder such debt is both "Horrible" and "Crippling."
As in 2008 and 2020, we can now see a pattern playing out in 2024, namely an inevitable shift from rate hikes and pauses toward rate cuts and the inevitable shift from QT to QE. Why inevitable?
Because cutting rates not only takes pressure off Uncle Sam's IOUs, but also eases the pain of those complicit S&P zombies staring down the barrel of over $740B in debt rollovers in 2024.
Even worse, there are those sitting in private wealth management suites smugly reminding their clients that Japan is in much worse debt than Uncle Sam, and if Japan can muddle through, certainly the US has nothing to fear.
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