US Debt Pile $33T

It is becoming increasingly obvious decade after decade, that the ever expanding US debt pile, will continue its lofty ascent no unabated. We agree with the likes of Chamath Palihapitiya, who believe the US Debt pile will be 2x GDP within a decade. The alarmists are everywhere and they have been for decades, crying about the increasing debt and the collapse of the US Dollar. We have seen this for a very long time and what we want our readers to understand is that as long as the US dollar is the worlds reserve currency and as long as US markets are the most trusted markets in the world, well then the game can go on and it probably will go on far past 2x, 3x GDP.

Sorry to say but in the big scheme of things, this is the natural course, the progression that is preprogrammed into the world of fiat fractional reserve central banking. With the massive US debt pile will also come massive FRB monetization.

What is monetization?

Well its simple really, just follow the FRBs total assets and you will notice that decade after decade it grows by factors. It has actually grown at an annualized rate of 12.14% over the last 25 years. This growth rate also corresponds to an actual inflation rate of 2.92%, which has been the FRBs standard model over this time frame as well. So when you hear now that the FRB is going to raise their inflation tolerance, you now know that its always had a near 3% target indicative by their balance sheet expansion. Here is the data chart which we have shown before:

As far as the US Debt well these next charts put it into perspective pretty well:

Source: CBO, ZeroHedge

We also thought it was comical on Sunday night when a lot of X users were commenting upon the 2Y note yield spiking, well of course we had to chime in because the US cash markets didn’t even open till 2am EU market open and thus any mark prior to that was someone’s bad data print for a market that wasn’t even open…but X was abound with morons saying something just broke in the US bond market…so we had to set them straight. Anyway here is a real picture of the US Govt 2 Year Note chart and you can see the wall of 5.06/08% yields that has been in place for quite some time now. Can the FRB fight this wall of implicit 2Y expected yields, we doubt it and considering the markets are looking for a no hike this week, no matter JPowells rhetoric, truth is, they are done. When the 2Y starts to trade higher than current levels then things may reprice, but for now, the bond market has set the ceiling: