Quote Originally Posted by jn1780 View Post
We should be lucky that rates are as low as they are with the size of our debt load. Besides curbing inflation, having the ability to lower the fed funds rate makes the Federal Reserve appear useful the next time a recession hits.

I guess the question is what is the technical limit we can keep taking on debt before we have to do full blow monetization?
The way I see it the real risk is that we eventually default on our debt due to political instability which will have massive fallout. As government debt continues to deteriorate in terms of credit rating & higher for longer rates while the rest of the world is diverging more cash will flow here while investors demand a higher interest rate of return to assume the risk. Long term post debt default we may not be the reserve currency in the world any longer. If you think inflation is bad now we could see hyper inflation should that occur and assets would be pennies on the dollar.

Hopefully none of this ever occurs but we have a couple of major problems as I see it. One is the government & the other is the Fed itself with the extreme polarization of monetary policy since 08 creating everything asset bubbles. We might kick the can down the road several more years but if we don't get the debt & rates under control who knows. If and when we hit the next rough patch it might be worse than what people think. The government is not in a position for massive bailouts this go around and we found out during Covid most people would be in a bad spot.