Does the U.S. Still Have a Debt Problem?
Total debt (government, corporate, and individual) in the United States has increased from $50 trillion in 2008 to over $80 trillion today.
Interest Rates
Should You Be Concerned About Bonds in Your Portfolio
The federal government ran a deficit of $3.1 trillion in 2020. If passed, President Biden’s $1.9 trillion COVID-19 relief proposal will pay for much of itself with bond sales. With all this debt supply, you would think that if demand does not increase, then interest rates would have to rise.
Retiring When the Stock Market Is High, and Interest Rates Are Low
Many retirees who are frustrated by low rates have put money that was earmarked for bonds into stocks, hoping the dividends plus the growth will provide sufficient income.
President Trump’s Risky Bet Against Our Trade Deficit
Trade deficits reduce economic growth, according to a theory posited by the great 18th-century Scottish economist and philosopher David Hume. The outflow of gold to pay the shortfall (trade deficit) would contract the money supply and automatically lead to the reduction of domestic prices as if by an ‘invisible hand.’[i]
Is Quantitative Easing (Q.E.) Stimulative
There is no way to know for sure. Still, when the Fed adds money to the economy by buying bonds from non-banks, the stock market seems to go up. When they subtracted cash from the economy by not reinvesting mortgage payments (quantitative tightening), it went down.
Why an Inverted Yield Curve Matters to You
Some believe that an inverted yield curve causes a recession as banks become less willing to lend, as their cost of funds (short-term rates) are higher than the price they can charge on a loan.