Cue the disco balls, the bell bottoms, and…the inflation.
Just as the Biden Administration gets ready to pump $1.9 trillion worth of liquidity into the economy, the global bond markets are signaling inflationary danger ahead, sending treasury yields above 2% for the first time in a year.
Meanwhile, the S&P just hit an all-time high and energy prices are on the rise with brent oil up 6.2% in the last week alone.
It shows investors are starting to recognize the reality of the moment; there are inflationary pressures in the economy that will likely be made worse with the promise of so much government spending. Even Clinton’s former Treasury Secretary sounded the alarm arguing in a recent op-ed that current inflation pressures are significant.
A big concern surrounding inflation is–once it arrives, what will we do? The Fed has nearly exhausted its arsenal with interest rates still hovering near record lows. As such, it’s unclear our government is prepared to deal with inflation once it takes off.
Lawmakers would be wise to watch the global markets before voting for any additional stimulus. It’s money we don’t have and cannot afford, as I’ve previously explained.
Inflation is one of the worst penalties for the middle-class but, good luck telling a spendthrift government that reality.
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