The bond market is in rebellion over Biden’s stimulus – because it would be bad for the economy
From a policy perspective, Joe Biden looks like Satan himself, the mere fact that the Democrats were able to con 81 million Americans into voting for the stupid laws Joe Biden is proposing is beyond my comprehension. So, if people are having a hard time interpreting the bond market right no, the truth is that the U.S economy is deflating and being propped up by the Federal Reserve.
Deflation? WTF are you talking about? Haven’t seen and heard about all the money printing?
Unfortunately, most people still imagine a world with a commodity-based currency, the fiat dollar isn’t completely detached from reality, which is that currency is simply a medium of exchange. Most commercial banks still aren’t lending and if they are lending they’re only lending in sectors they imagine will alleviate their entity from blame, when Joe Biden’s economy really starts to raise consumer prices, during a DEFLATIONARY cycle.
When people aren’t being productive and are being paid for it, in a normal world this would be inflationary, but you see in this modern world we have a CENTRAL BANK! People are still having a hard time comprehending the price of Bitcoin, well Bitcoin unlike a ‘Fed-Coin’ is DECENTRALIZED and it’s actually mocking the U.S dollar.
There is a production cost to making a bitcoin and currently, that production cost is decentralized. Now, I’m not here to discuss the long-term viability of Bitcoin as an asset or a medium of exchange, what I’m pointing out is that the central banks are cornered and Joe Biden is quite possibly the dumbest U.S President in the history of the United States.
Joe Biden struggles to complete a sentence, and I remind you this is nothing new, this dates back to his childhood. So it’s quite easy to see that Joe Biden has no idea what’s in the executive orders he’s signed. But what the market does recognize is the stimulus package and the temporary fix it’s going to give before exacerbating the problem.
Now by temporary fix I mean prior malinvestments by prior U.S Presidents will be financed, checks will be sent out to Americans, maybe American labour will get an artificially boost in hourly wages, but by creating all of this INFLATION, the cost to service this debt is going to BALLOON even at near-zero interest rates.
It’s been game over since 2007-2008, now the numbers just look silly, and in fact as small as Bitcoin looks on paper, the cost of bitcoin is looking more reasonable. Now, what’s wrong with this entire equation are commodity prices, because you see there’s a cost of labor to bring commodities to market and Joe Biden has made commodity prices more expensive.
Seeing this the bond market is beginning to see the writings on the wall, but the real question is will they allow it to crash or will they bail it out! The gold bugs believe it will be bailed out which potentially equals higher Gold prices, the bond traders see a deflationary crash which means higher interest rates.
Being that America has massive trade deficits, the last thing Federal reserve wants to do is destroy its relevance, so to me, it almost looks like the stand-off that was once Jerome Powell vs. Donald Trump, will now be the Fed chair vs. the Joe Biden administration. I know I’m simplifying things, but I do remember Jerome Powell saying he would let inflation run red-hot!
But higher prices for things will hurt the poor and benefit the wealthy, and unfortunately for the left, most of the worlds wealthy are paying their fair share of taxes and if you burden them with more taxes, they buy more assets, which basically what’s been happening since Obama bailed out Wall Street. The difference between Obama and Biden is that Biden is on the tail end of the bubble and is even more extreme than Barack Obama was.
Interesting times ahead!