“However, that will flip the other way for interest expenditures will exceed defense by 2020 and with a uptick in interest rates, then you will see inflation.”
My statement as a matter of fact seem to have picked up a lot of interest. Inflation will return ONLY when interest rates rise. I know this is opposite what they teach in school and this is opposite of what the pundits preach on CNBC. Sorry – this is just a real fact of life not theory.
Because government is the biggest debtor and they will never curtail their spending or new offerings of debt each year, as the Fed raises rates to deal with a capital inflow into US assets fleeing elsewhere as sovereign debt moves into crisis, the US national debt expenditures will rise faster than at any point in history. If rates rise now from 1% to 2%, that is a huge increase. We are facing a runaway debt train and that will be the catalyst for political reform.
We will be republishing an expanded version of the Greatest Bull Market in History. I have added 500 pages expanding the scope back to the start of socialism and the 34 years that led to the 1929 high. The newspapers logic was exactly opposite. Rising interest rates were touted as bullish for that meant people were still borrowing – CONFIDENCE. The press post-1929 became socialistic. The movement in interest rates was then all about what government wanted the markets to do.
We will return to the view of pre-1929. It is just that so many people have been taught all this nonsense surrounded by theory which is part of the socialistic agenda. We will embrace reality once again.
Without a major increase in interest rates, the sheer volume of new debt will cause total interest expenditures to rise exceeding defense by 2020. If rates take off much faster from 2015.75, we will bring this in as early as 2017.
