I just heard on the biz news network a day or so ago the U.S. paid $552 billion on their debt last year with interest rates where they currently are! That's scary as Hell and totally unsustainable going forward.
Just imagine if they attempted to raise rates anywhere close to 4 or 5%. It couldn't be done. I also just read an article where Kyle Bass made the comment the Fed won't be able to raise rates 100 basis points (1 percent) without causing big problems. I agree with him.
IMO we'll initially see people flee into bonds as the market goes lower, obviously for implied safety, but that doesn't mean rates can't go higher from where the Fed wants them to be and if that happens then what can they do. Nothing, so depending on how high rates go that could definitely mean a default could be in the works.
How would people view a cratered stock market and a bond market that is on the brink of going under? That won't be a very bright outlook I'm afraid.
The best way FF can hedge my rising inflation environment is to increase in share price to keep up with the inflation. Are ya listening Dan?
Our time is coming.
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