🌍 Debt-service trap: the Fed can't really fight inflation, so we monetize and debase

Sacks macro w=1.12 · n=40 · E51 (2021-10-16) · explicit_prediction · strength 3 ▶ 31:03 SUPPORT

“And now inflation is making a return and the Fed is going to have to make some really tough choices about whether to control inflation and essentially impose austerity on the on government spending, or whether they monetize the debt, which will lead to a runaway depreciation of the dollar.”

Chamath macro w=1.06 · n=47 · E51 (2021-10-16) · sentiment · strength 2 ▶ 35:47 SUPPORT

“No, we're going to print money and we're going to pay ourselves. We're going to go to the central bank. ... We're going to monetize our debt.”

Friedberg macro w=0.93 · n=40 · E51 (2021-10-16) · explicit_prediction · strength 2 ▶ 34:33 SUPPORT

“I mean, I don't know about Taiwan, but I think we're just going to keep inflating our way out of this mess. ... Remember, like that's what we did last year. And it's what we'll do again this year.”

Sacks macro w=1.12 · n=40 · E53 (2021-10-30) · explicit_prediction · strength 3 ▶ 47:39 SUPPORT

“Now, today, the government debt is 125 percent of GDP. So if, and this goes back to the Druckenmiller point from a previous pod, if the Fed were to jack up interest rates to say the historical norm of 4.9 percent, debt service would go from 2 percent of the federal budget to 30 percent. You would have a massive crowding out of government programs.”

Sacks macro w=1.12 · n=40 · E55 (2021-11-13) · explicit_prediction · strength 3 ▶ 55:21 SUPPORT

“So the problem we have now, okay, here's the problem we have, is there's going to be no Paul Volcker. Why? We can't afford to jack up rates, because the federal government's debt is so much bigger than it used to be. ... we don't have effective tools to fight it anymore because we've given up our ability to raise rates because it would increase the cost of the debt so much.”

Friedberg macro w=0.93 · n=40 · E58 (2021-12-11) · explicit_prediction · strength 2 ▶ 17:37 SUPPORT

“Now, the problem is if you then raise rates and you can't borrow that money, and suddenly people have to start to pay that debt down without economic growth having occurred, the whole system goes bankrupt. So the challenge that the Fed has is how do we raise rates without triggering an economic recession?”

Sacks macro w=1.12 · n=40 · E58 (2021-12-11) · explicit_prediction · strength 2 ▶ 42:08 SUPPORT

“It is a breaking of the bank. They're talking about minting trillion dollar coins. ... So you're looking at 150 billion of incremental debt service costs, right? So multiply that over 10 years, that's 1.5 trillion over 10 years. That's your build back better right there.”

Chamath macro w=1.06 · n=47 · E71 (2022-03-05) · explicit_prediction · strength 3 ▶ 1:17:15 SUPPORT

“And so if we end up running massive deficits, and now we're at, you know, 150, 250, 300 percent of GDP, I think that, you know, morally that's that is the right thing to do.”

Chamath macro w=1.06 · n=47 · E80 (2022-05-13) · explicit_prediction · strength 2 ▶ 1:36:00 SUPPORT

“But I think the reality is there's a Fed put somewhere in between here, because if we see the credit markets really seize up, which we would if the equity markets continue to retrench, the Fed will be forced to step in with liquidity and we back to where we were before.”

Chamath macro w=1.06 · n=47 · E98 (2022-10-01) · explicit_prediction · strength 3 ▶ 32:39 SUPPORT

“You print more money. I'm sorry to be the bearer of bad news, but it is not as if we have a law, a constitutional law, or it's not as if governments have collectively decided that you cannot have debt to GDP above a certain number. That doesn't happen, guys. We passed 100 under Obama, and we've just kept printing money.”

Sacks macro w=1.12 · n=40 · E98 (2022-10-01) · sentiment · strength 2 ▶ 33:15 SUPPORT

“When rates were like near zero, and we had the opportunity to refinance the US government debt using long-term rates, basically long-term bonds”

Friedberg macro w=0.93 · n=40 · E98 (2022-10-01) · explicit_prediction · strength 3 ▶ 31:26 SUPPORT

“That's $15 trillion of annual debt service, which is like 18% of global GDP. Like the debt service alone.”

Chamath macro w=1.06 · n=47 · E100 (2022-10-14) · explicit_prediction · strength 2 ▶ 1:02:51 OPPOSE

“the single biggest thing I think that will prevent nuclear war is the inflation that we're feeling. And the reason is because it allows the Fed, in my opinion, for the first time really in the last 15 years, to act properly.”