Have you heard the good news?
The Atlanta Fed GDPNow estimates a 5.9% growth in real GDP for Q3 2023. In nominal terms, we can even boast of an 8.9% surge.
What fantastic news! Growth! Productivity!
This must mean we can all breath a collective sigh of relief as Powell continues his valiant war against inflation as GDP rises, right?
I can almost hear the champagne bottles popping from the Eccles Building to the Bezos-owned Washington Post.
The financial wizards have saved us once again, right?
Oh, so, so, so, so WRONG.
Debt-Driven Growth is Not Growth, but a Slow Death Trap
As usual, the answer lies in math, history and, of course, THE BOND MARKET.
For years and years, I have tried to make one point (and indicator) almost reflexively clear, namely: The Bond Market Is the Thing.
This is because the bond market reflects debt forces, the most cancerous of all market killers once they metastasize from the acceptable to the fantastical, and the cheap to the unaffordable.
Today, we stare upon the greatest national and global debt bubble in history.
And the cost of that debt is getting higher, not lower.
This should be the key theme of every conversation, but instead, our citizens are arguing over gender neutral bathrooms and exciting politicos (opportunists) scurrying for power like donkeys fighting for hay.
Far better, in my opinion, if the people understood boring things like sovereign bonds…
In particular, they just need to consider and understand yields on Uncle Sam’s IOU (with particular emphasis on his 10-Year UST), which tells us the market’s measurement of the cost of debt.
…click on the above link to read the rest…