Ray Dalio warns Trump policies could trigger capital wars. China quietly orders banks to dump U.S. bonds. Warsh, the next Fed chair, will inflate the debt away.

by

Seriously, it’s ugly, and we’re the ones paying.

Warsh, the next Fed chair, will inflate the debt away.

He is in favor of yield curve control.

– This means pegging US short-term interest rates to an artificially low level
– The Fed commits to buying unlimited amounts above that level to push interest rates down

This would be reminiscent of the WWII period.

Back then, US debt-to-GDP was 125% vs 121% now.
YCC enabled the government to borrow vast amounts of USTs without blowing out interest expenses.

Those costs were pushed onto citizens via inflation.

From 1945-1980, the US gradually brought debt-to-GDP down to 30%, which later enabled Volcker to raise rates to 20% to kill inflation. This seems to be Warsh’s playbook.

The idea that Trump would nominate someone more hawkish than Powell, after attacking him for over a year for being too hawkish, was ridiculous to begin with.

Inflating the debt away was always the plan… needless to say, hard assets outperform during inflationary periods.

https://twitter.com/WealthWatcherCo/status/2020737596020662330