01-07-2025
Washington Needs Fiscal Hawks, Says Guggenheim's Walsh
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Are you worried that the annual deficit, which is now approaching $2 trillion a year and the total indebtedness, which is over $36 trillion, might be too much to sustain this bill passing the Congress? Or do you think the debt is really not as big a problem as people make it out to be? So I tend to be in the camp of when you incur debt, you end up having to pay it back. With the rise of modern monetary theory, which has become in vogue in the last several years, particularly in Washington, which is the belief that if you print money, if you have the reserve currency, you don't actually have to ever pay that debt back. And so mounting levels of debt and deficit spending are fine. I don't buy that. I think there's a point at which the US government has to be able to sustain itself cost of because the cost of interest is going up for the Treasury. All of this just continues to accumulate. I think it's very difficult for our friends in Washington to get to the point where they're going to be able to return to levels of spending from pre-COVID. But in order to actually get that trajectory to to settle down in terms of the future levels of of debt, they'd have to return to pre-COVID levels of spending. I don't see that kind of willpower in Washington. So I think spending will continue. I think that we're going to continue to see real significant issues amongst bond buyers. And I think that as a result, the term premium is definitely gone up because there's a sense of more risk in the US as a result of all this spending. I'm of the camp. We need some fiscal hawks.
