Wednesday, July 18, 2018

Favorite Market Strategist

One of my long-time favorite market strategists is Dr. Jeremy Siegel from Wharton.  His latest commentary shows his belief that the stock market would jump 10% - if the trade wars would suddenly end.

That is consistent with my belief that the market has moved sideways all year, even though corporate earnings continue to rise strongly.  The stock market has not kept up with rising earnings.  It is being depressed by the trade wars.

One difference I have with him is that he believes the low unemployment rate will drive the Fed to increase rates two more times this year, while I believe the Fed will be too afraid of the stock market's reaction to inverting the yield curve and will only raise rates one time.

Tuesday, July 17, 2018

Flatter Yield Curve -- Who Cares?

Wall Street Wags are fretting about the "flat yield curve" but fail to mention that such a yield curve has accurately predicted 14 of the last 7 recessions.

First, the yield curve is the difference between interest rates on 2-year Treasury bonds and 10-year Treasury bonds.  Longer term rates are higher than short term rates for several reasons.  The longer term means more things can go wrong, i.e., the borrower's credit will go bad or inflation may worsen.

Second, short term rates are largely driven by the Fed.  Long term rates are largely determined by the supply and demand for long term bonds.  But not always!

Third, for the last 18 months, the Fed has been raising interest rates in the short term.  Since Quantitative Easing began, the Fed began stimulating the economy by buying long term bonds, driving down those rates.  In other words, the Fed has flattened the yield curve, not the economy.

Fourth, virtually all other economic data indicates a strong U.S. economy.

Fifth, fret not!

Sunday, July 15, 2018


Many pundits are going crazy, trying to figure out the relationship between Trump and Putin.  One even remarked that their relationship is the greatest mystery of this century.  Actually, I think the answer can be found with Trump's shock when he learned that Vice President Pence had never earned more than $200 thousand a year and had only $15 thousand of cash in the bank.  (Nobody can ever forget how often Trump bragged about his own wealth.)  Trump questioned how Pence could be any good, if he never made any money.  Knowing Pence could nonetheless deliver the evangelical vote, Trump hired him anyway.

Now, with an estimated $200 billion of wealth, Putin is easily the wealthiest person on the planet.  Trump may or may not anticipate needing Putin's money in the future, but I think Trump sees Putin as someone to worship, because he worships wealth.  Unfortunately, like most worship, it clouds Trump's judgement.

If Putin is the wealthiest person in the world, then surely he also deserves the most respect.  Well, doesn't he?  Your President thinks so . . . .

Sugar Man

Sugar man, won't you hurry
'Cos I'm tired of these scenes
For a blue coin won't you bring back
All those colors to my dreams

Silver magic ships you carry
Jumpers, coke, sweet Mary Jane

Sugar man met a false friend
On a lonely dusty road
Lost my heart when I found it
It had turned into a dead black coal

Silver magic ships you carry
Jumpers, coke, sweet Mary Jane

Sugar man you're the answer
That makes my questions disappear
Sugar man 'cos I'm weary
Of those double games I hear

Sugar man, Sugar man, Sugar man, Sugar man
Sugar man, Sugar man, Sugar man

Sugar man, won't you hurry
'Cos I'm tired of these scenes
For the blue coin won't bring you back
All those colors in my dreams

Silver magic ships you carry
Jumpers, coke, sweet Mary Jane

Sugar man met a false friend
On a lonely dusty road
Lost my heart when I found it
It has turned to dead black coal

Silver magic ships you carry
Jumpers, coke, sweet Mary Jane

Sugar man you're the answer
That makes my questions disappear
Cold Facts
(C) 2008

Saturday, July 14, 2018

Fear Not Inflation

Let's assume you get a 100% VA mortgage for a new house.  Let's further assume that, ten years later, your mortgage is down to $80 thousand, and your home is now worth $125 thousand.  Originally, the loan-to-value of your mortgage was 100%.  But, that dropped to a much safer 64% ten years later (80/125).  My point is this:  there are advantages to inflation.

Debt can either be repaid or inflated away.  Our national debt was over $21 TRILLION.  Do you really think we're going to repay that in your lifetime?

The latest data from our Producer Price Index is up 2.7% on year-over-year basis.  The Consumer Price Index is up 2.9%.  While that seems modest in comparison to the Reagan era, remember it was only four years ago that the Fed was worried about deflation, when values decrease -- a much more pernicious problem.  The Fed had been praying for 2% inflation, and we have now blown past that goal.

There are two types of inflation: demand-pull and cost-push.  Demand-pull inflation occurs when increased demand for a product/service pulls up the price.  That is NOT the type of inflation facing America today.  Instead, we are facing cost-push inflation, where the increasing price of inputs causes final product prices to increase.  Today, with our capacity-utilization about 80%, there is very little excess production capacity.  One of the most important inputs is labor, and there is very little unemployment to draw into the workforce.  Salaries have started to rise and can be expected to rise faster.  Lastly, don't forget that tariffs also increase costs.

Inflation is coming!  Rejoice!!   

Thursday, July 12, 2018

A Lesson From Tragedy

Since my father told me about his experience in World War II, seeing a freshly liberated Nazi concentration camp, I have been very interested in the Holocaust.  Recently, I had the opportunity to tour the Richmond Holocaust Museum, which I highly recommend.  While I am steeped in the horrible atrocities committed against the Jews, I've become interested in the aftermath, after the surviving Jews were put into Displaced Persons (DP) camps.  Unfortunately, there was no plan after that, and hundreds of thousands of people were forced to just languish in these camps, sometimes for years.  From concentration camps to DP camps, they were still not free.

So, here are many thousands of good, decent people who just want a better life.  Is there a lesson for us today?

Various Jewish organizations in the U.S. saw the problem and tried to help.  They sent teachers to teach local languages to the Jews, who mostly spoke Yiddish.  They sent teachers to teach sewing, baking, carpentry, etc.  It was not a major coordinated program by all Jewish organizations.  Each synagogue sent whomever was willing to go, to teach whatever they knew.  By all accounts, these teachers were a big help in helping the survivors adjust and find work.

Now, draw a comparison to the flood of refugees from Latin America.  Rather than a revolving door at the border, why don't individual Hispanic organizations send whomever is willing to go, to teach whatever they know, to the various refugee holding areas in this country?  They could teach English, keyboard skills, car mechanics, etc. 

It just seems wasteful to buy plane tickets for people to leave, when we have 6.8 million unfilled jobs?

If Jewish organizations could help their refugees after World War II, without government involvement, why can't Hispanic organizations do the same today?

Wednesday, July 11, 2018

T - I - G - H - T

In your lifetime, how many times have there been more job openings than people looking for jobs?

Today, there are 6.6 million unfilled job openings and only 6.0 million people looking for work.  More precisely, there are 6.6 million openings for skilled workers and 6.0 million unskilled job applicants.  The "skills gap" has never been greater.

Another indicator of a tight job market is the number of people quitting their job.  Workers don't usually quit their job, unless they believe they will find another job quickly, often at higher pay.  The percentage of the workforce who quit their jobs last month was 2.4%.  That is the highest since 2001!

Most economists agree that one of the primary constraints on our GDP growth is our inability to grow our workforce.  Republicans take the easy route of blaming Americans for being lazy, ignoring the "skills gap."  Pulling more unskilled workers off the couch and into the workforce will NOT help.

As growth is largely inside smaller companies, those companies are unable to fund apprentice training programs.  Also, since government, at every level, cannot afford to educate the workforce, that burden just falls onto young people and their families.  If they cannot or will not fund job training, they might as well stay on the couch.  There is no agreement on how we bridge the gap between companies who need skilled labor and workers who want to learn skills.

Bring on the machines . . .

Tuesday, July 10, 2018

Two Special Places In Hell

Few of us maintain our mental sharpness until the end.  Mental fuzziness should be a final luxury at the end of life, not open season to be preyed upon.  Unfortunately, I just read about yet another Ponzi scheme, stealing $102 million from about 600 seniors in Florida, and I hope there is a special place in Hell for those who prey upon the vulnerable. 

However, there is something unusual about this case.  When a financial advisor retires, it is not uncommon for him/her to sell their "book of business" to another advisor.  That is how the crooks in this case acquired senior investors to fleece.  I think financial advisors should bear some responsibility for selling their "book" to an unsavory advisor.  The selling advisor should conduct reasonable due diligence that the buyer is not a crook.  That is the fiduciary thing to do!

The tricky part is which authority should have jurisdiction?  If the selling advisor is retired, neither the SEC nor FINRA have direct jurisdiction.  If local law enforcement has jurisdiction, with their minimal financial training, how can they determine "reasonableness" of due diligence?  The selling advisors should also have their own special place in Hell.

Sunday, July 8, 2018

Prayers To Thailand

Although I seldom do it anymore, I have been a scuba diver for most of my life.  In 1975, I had the opportunity to dive a cave off the Suwannee River in the Florida Panhandle.  That was enough to convince me that cave diving is vastly more difficult and dangerous than regular open water diving.  I learned my lesson and never did it again.

Watching the rescue of the Thai boys is spell-binding for me.  Already, a Thai Navy Seal has died.  While four boys have been rescued, I am praying for the rest and ALSO for the divers.  One, cave diving is dangerous enough but, two, working with a kid who may panic at any second represents another major danger to the divers.  I hope the boys are somehow tranquilized, for the sake of the divers.

It would be an honor to salute those divers!


Q.  Do I believe the Russians tried to influence our 2016 elections?
A.  Yes

Q.  Do I believe it was authorized by President Putin?
A.  Yes

Q.  Do I believe Putin wanted to help candidate Trump?
A.  It was far more important to Putin that Clinton lost..

Q.  Why did Putin hate Clinton so much?
A.  He believes she tried to interfere with HIS election in 2014.

Q.  Did she try to interfere with Putin's election?
A.  Yes, but only with her comments, not with any cyber warfare -- a major escalation.

Q.  Did Trump collude with the Russians?
A.  I would be surprised if he did.

Q.  Did Trump's campaign collude with the Russians?
A.  I would be surprised if they did not.

Q.  Is the current relationship between Trump and Putin unhealthy?
A.  Yes, but not as unhealthy as his relationship with our allies.

Q.  Is President Trump is a threat to our national security?
A.  Yes

Q.  Do I still believe President Trump will leave office before 2020?
A.  Yes, "the wheels of justice grind exceedingly fine" and Mueller has been grinding a long time.

Q.  Do I suspect President Trump obstructed justice?
A.  Reflecting his lack of respect for norms, I would be pleasantly surprised if he did not.

Q.  Is it possible to understand Trump's "base" without reading Hillbilly Elegy by JD Vance?
A.  No

Saturday, July 7, 2018

Q2 Column

To read my latest column for Inside Business, go to: 

Thursday, July 5, 2018

Oversold ?

According to Goldman Sachs, the smartest people on Wall Street work at Goldman Sachs.  Indeed, their research department actually deserves that accolade.  Their latest analysis suggests commodities will benefit strongly from the stronger dollar.  More significantly, they believe there is too much angst over the current trade war, calling such fears "oversold."  I hope they are right!

My concern is that we have entered a very strange new world.  There is no person alive who has ever experienced a worldwide trade war.  Plus, economists have been getting migraines trying to build an econometric model of such complex worldwide change.  The fine analysts at Goldman Sachs are not concerned, but I still "toss & turn" at night . . .

Wednesday, July 4, 2018

The Courage To Be Free

There are economic systems, and there are political systems.
Examples of economic systems include capitalism and socialism.
Examples of political systems include democracy and dictatorship.
Of course, there are degrees of each.

The combination of capitalism and democracy is called free enterprise.
The combination of socialism and dictatorship is called communism.
You can have the combination of capitalism and dictatorship, such as today's China.
You can have the combination of socialism and democracy, such as early Israel.

On July 4th, 1776, we declared our independence from Britain.
Nobody said Happy We're-Not-Brits Day.
Nobody said Happy Democracy Day.
Nobody said Happy Capitalism Day.

Now, we just wish each other Happy Independence Day.
Then, we look for sale items . . .
Does anybody remember Patrick Henry's words on March 23, 1775?
"Give me liberty, or give me death!"

He didn't say "give me capitalism, or give me death."
Nor "give me free enterprise, or give me death."
Nor even "give me democracy, or give me death."
Maybe, he just meant "the Brits gotta go?"

Saturday, June 30, 2018

A Bloodless War

I was talking with some fellow students of economics.  We started discussing the 0.2% drop in estimates of Q1 GDP growth, but that quickly morphed into a discussion on politics.  With a bunch of economic nerds and with a rich assortment of economic datapoints, why were we talking about politics?

As we talked through that, it became apparent that, despite the overwhelming majority of the economic datapoints being positive, we were all experiencing a heightened anxiety, due to the current trade war.  That is an enormous economic variable, and nobody has much experience modelling such a war.  The history of trade wars is more confusing than instructive.  Besides, no country has ever declared a trade war against so many other countries at the same time.

So, the minor drop in Q1 GDP growth can be interpreted either as some developing weakness in the economy or, more likely, as simple noise from the collection of data.  There!  We discussed economics.  Now, what's the latest data from the front lines in our trade war?  And, why is it being run by politicians instead of economists?

Friday, June 29, 2018

President Zuckerberg

Zuckerberg is founder and CEO of tech giant, Facebook.  To my knowledge, nobody ever accused him of being a nice guy.  Still, he was man enough to recognize the intrusion and interference of Russia into both our 2016 election and 2018 election.

In May, he convened a meeting in Menlo Park of executives from all the major tech firms to discuss ways to prevent any further election interference by the Russians.  The FBI and Department of Justice were represented but offered nothing.  Obviously, protecting the integrity of our elections is a higher priority to tech firms than our Federal government.

Maybe, when they meet privately in Helsinki next month, President Trump can ask President Putin to be nice and stop interfering, please.

But, then again, to my knowledge, nobody ever accused President Trump of being a nice guy either.  So, which non-nice guy should be president?  Which non-nice guy is trying to protect our elections?

Wednesday, June 27, 2018

Paging Pandora

The opening salvo in this trade war was the immediate rejection of the Trans-Pacific Partnership (TPP), which I wrote then was a mistake.  The Administration looked only at the raw commercial aspect of the TPP, ignoring its wider significance, especially the economic containment of China.  It was a clear rejection of geo-politics as part of trade policy.

There is no disagreement that it is time to update our many trade agreements.  For example, the NAFTA agreement is 24 years old and does need updating.  However, I've written before that it is worrisome that we are trying to renegotiate our many bi-lateral and multi-lateral agreements -- all at the same time.

In particular, I'm worried about our bi-lateral negotiation with China, the world's second largest economy.  Our logic has been that our larger economy gives us a greater capacity to suffer economically.  After all, $50 billion is a smaller percentage of the U.S. economy that the Chinese economy.  Also, timing is thought to be on our side as our economy is booming, while the Chinese economy is somewhat sluggish.  (Unfortunately, the most recent data shows their economy is picking up.)  Their stock market has already entered bear market (down 20%), which is attributed to trade war fears.  Our President cares about the U.S. stock market, while the Chinese president Xi is immune to any pressure from the Shanghai stock exchange.

Other differences in perspective also matter.  The Chinese always take the long-term view, and trade negotiations normally take a very long time.  The Chinese are not motivated by any short-term WIN, which makes for good TV.  In addition, their leaders are in a better position of political strength.  Their hold on power is undoubted.  While Trump's political strength has increased significantly in recent months, imagine how that would change if there is a "blue wave" in November and Mueller's investigation is damning.  That is a strong motivation to conclude our trade negotiations sooner than later.  Long-term thinking versus short-term thinking?  Undoubted political strength versus tenuous political strength?

What, indeed, is in Pandora's box?  Who knows?

Monday, June 25, 2018

Sociological Wisdom ??

James Davison Hunter is a brilliant sociologist at the University of Virginia.  As he is an excellent but prolific writer, I have barely begun reading everything he has produced.  But, my thinking has already started to evolve.

There are military wars, and there are culture wars.  Military wars are usually caused by tribal conflicts or economic conflicts.  Culture wars are more complicated.  Because religions have been in conflict for centuries, we assume that conflict continues.  However, conflict today is less between religions and is greater within religions.  For example, there is more conflict between traditional Protestants and non-traditional Protestants and there is less conflict between, say, Protestants and Catholics.  The same tension exists within Islam and within the Jewish faith.  

Describing this as conflict between conservatives and progressives is not helpful.  The division does not focus on the degree of centralized power.  It is more about the use of power to find truth.  Traditionalists find truth in the past and believe traditions are useful and reassuring.  Futurists find truth within individuals and believe traditions are interesting but restrictive.

As an example, traditionalists within the Protestant faith have more in common with traditionalists in the Catholic faith or the Jewish faith or even within Islam than one would expect.  While the trappings and traditions may vary, all wish to cherish the lessons of the past.  Likewise, the non-traditionalist or futurist wing of the four main religions have more in common with each other than with the the traditionalist wing of their own religion.  The futurists don't want "somebody else's truth."  

The conflict between traditionalists and futurists rarely leads to military war but is the predicate to culture wars.  In the U.S., the culture war is not between Republicans and Democrats.  Our culture war is between traditional Republicans and futurist Republicans, likewise for Democrats.  Because the conflict over truth takes place within the unrelated, arbitrary organisational structure of Republicans and Democrats, it is extremely unlikely there will be military conflict.  The conflict over truth is submerged in and contained by the phony political conflict between Republicans and Democrats.

Dr. Hunter, forgive me for my loosely-written interpretations, but I thank you anyway!

Sunday, June 24, 2018

"Crucify Your Mind"

Was it a huntsman or a player
That made you pay the cost
That now assumes relaxed positions
And prostitutes your loss?
Were you tortured by your own thirst
In those pleasures that you seek
That made you Tom the curious
That makes you James the weak?

And you claim you got something going
Something you call unique
But I've seen your self-pity showing
As the tears rolled down your cheeks.

Soon you know I'll leave you
And I'll never look behind
'Cos I was born for the purpose
That crucifies your mind.
So con, convince your mirror
As you've always done before
Giving substance to shadows
Giving substance ever more

And you assume you got something to offer
Secrets shiny and new
But how much of you is repetition
That you didn't whisper to him too.

Cold Fact
(c) 2008

Saturday, June 23, 2018

> 100 %

When was the last time you went to:  

Go, go look at it now.  There are lots of numbers, all rising rapidly.  Today, focus on two of them in particular.  First, in the upper left, find the national debt, which is now over $21 TRILLION.  Second, near the center, find the Gross Domestic Product, which is now over $20 TRILLION.  In other words, our debt is more than 100% of GDP.  That's an important relationship.

Economists debate whether a "death spiral" begins automatically at 100% or 110%.  The U.S. has several advantages, allowing us to exceed that automatic death spiral for now, but nobody knows how much for how long and in what interest rate environment.  So, why take that chance?

Keynesian economists and Supply-side economists focus in increasing GDP, which is fine.  Only Austria economists focus primarily on the level of debt, which is even better.  

The first step is to stop digging the hole deeper.  The second step is to raise revenue.  Good Luck!

Friday, June 22, 2018

Our Growth "Governor"

I hate to sound like a broken record, but . . . the Index of Leading Economic Indicators (LEI) was up again last month.  This traditionally means there is no recession on the 12-18 month time horizon.  Our economy being propelled by new manufacturing orders, consumer expectations, stock prices, and capital goods.

But, there is an interesting change.  The LEI has slowed over the last three months - still positive but slowing.  Apparently, the lack of available labor is starting to slow us down.  This doesn't indicate a recession, but does indicate that the labor shortage is becoming a "governor" on our growth.

The traditional Republican view is that we could get more workers if people were forced to work.  While I agree those people should get no welfare nor food stamps, I think American employers would prefer non-lazy workers.  Whether those lazy people get benefits or not, that sidetracks the issue --   we need more non-lazy workers.

The traditional Democratic view is that we should allow more immigration.  Visions of the Border Patrol pop into the mind, but don't forget - America is blessed with a long line of applicants for LEGAL immigration.  We need them, and they want us!  Unfortunately, our quota system is obsolete and will soon be limiting our economic growth.

More LEGAL immigration is NOT bad.  In fact, we need to OPEN the doors to more legal immigrants.

Thursday, June 21, 2018

Spread Too Thin ?

Long ago, when I was living in Texas, I read a short book, whose name is now long lost inside my memory.  It speculated on how America would be different if Hitler had won World War II.  Not surprisingly, it described a dystopian America as merely a state of the Ayran Nation.  There would be no Blacks, no Hispanics, no Asians and no American Indians.  America would be lily-white.  There would be no churches, no Catholics, no Jews, and no Protestants.  He predicted a socialist nirvana, even comparing it to an idealized North Korea, under Kim Jung On's grandfather.

Obviously, he has been wrong, but he was trying to show how much hangs in the balance on major strategic decisions.  His argument was that it only took one wrong strategic decision by Hitler to save everything we hold dear.  That one decision was to open war with Russia, forcing him to fight a two-front war.

I worry that President Trump is fighting the current trade war on too many fronts.  First, he killed TPP before it even started.  Then, he threatened  NAPFA, fighting with Mexico and Canada, before declaring war on the Eurozone.  Now, he has declared war on China.  How many wars can we fight?

Yes, a trade war has a lower body-count that a military war, but trade wars have often led to military wars.  Make no mistake - trade wars are deadly serious!

Successfully concluding any one trade negotiation first would provide a useful template for future negotiations.  Instead, we are manufacturing maximum uncertainty, and we all know how much the stock market hates uncertainty.  As uncertainty rises, the stock market declines.

Wednesday, June 20, 2018

Invisible and Vulnerable

While it is painful to watch the vulnerable children along our southern border, it is at least visible.  Less visible is mistreatment of another vulnerable population, i..e., the elderly.  It doesn't happen to large groups but to one lonely invisible individual after another.

But, did you know that you can be fined between $500 and $1,000 if you know of any elder abuse and don't report it?  In most cases, that is because you don't know HOW to report such abuse.  It is quite simple -- pick up the phone and call 1-888-832-3858.  

Now, do the right thing and report anybody who abuses an elderly person!

Tuesday, June 19, 2018

At Any Cost

It was in Billings, Montana on May 26th, 2016, when the President promised:

“We’re going to win. We’re going to win so much. We’re going to win at trade, we’re going to win at the border. We’re going to win so much, you’re going to be so sick and tired of winning, you’re going to come to me and go ‘Please, please, we can’t win anymore.’ You’ve heard this one. You’ll say ‘Please, Mr. President, we beg you sir, we don’t want to win anymore. It’s too much. It’s not fair to everybody else.’”  

Intractable problems can be solved by moderates . . . or bullies!  Thanks to gerrymandering, there are not enough moderates in Congress to solve the immigration problem.  Maybe, we do need a bully?

I recall the logic of another president, who concluded it was better to kill a hundred thousand Japanese than to lose another ten thousand Americans.  Maybe, emotional scarring ten thousand brown kids is a small price to pay for making the President a "WINNER?"

That definitely would NOT make me feel like a winner.  John McCain is one of my personal heroes, and he described Trump's policy of separating kids from illegal aliens as "an affront to decency."  

Is "winning" really that important?  Who wants to win, if this is what you have to do?  What kind of ego demands "winning" at any cost?  Is the Wall really worth sacrificing our decency to get it?  

That is too high a price for solving even an intractable problem.

Monday, June 18, 2018


As 2018 dawned, it looked like we were enjoying synchronized global growth.  The U.S. had led the world out of the recession and now looked forward to the increasing growth in Europe and Asia.  But that didn't happen.  Instead, the U.S. has gotten stronger, while the others fell further behind.

For example, the Chinese central bank cancelled a scheduled increase in interest rates.  Capital Investment and Retail Sales both weakened last month.  The Chinese slowdown slowed the rest of Asia, as usual.

However, Europe has been an even bigger disappointment this year.  Eurozone growth has dropped from 0.7% in Q4 of last year to only 0.4% in the first quarter of this year.  The ECB has reduced its full year Eurozone growth estimate from 2.4% to 2.1%.  One big reason for this slowdown is Germany, the world's third largest exporter, the level of exports has fallen in three of the first four months, dropping 2.5% in April alone.  Germany's estimated full year GDP growth has been cut by half.

One minor reason was the surprisingly widespread flu epidemic.  A major reason was the populist takeover of the Italian parliament, which strengthened the wait-and-see attitude of corporations across Europe.  (Everybody remembers the fiscal crisis in 2010 precipitated by Greece.)  In January, 26% of German consumers expected economic conditions to deteriorate, compared with 43% today.  There is considerable anecdotal evidence that corporations are hunkering down and conserving their resources to survive a possible trade war, which is prudent. Rising caution is a wet blanket on the stock market.

This is not to suggest an investor should sell their international stocks.  Don't forget -- A well diversified portfolio will include some exposure to international stocks.

The President said trade wars are "easy to win." 

Let us pray . . . for a quick peace!

Saturday, June 16, 2018

Suicide Mission ?

Republicans abuse Supply-side economics, which argues that a tax cut increases the budget deficit in the short run but decreases the deficit in the long run.  They are hostage to the baseless belief that all tax cuts are beneficial at all times.  Republicans are not aware that a tax cut will not cure the common cold.

Democrats abuse Keynesian economics, which argues that budget deficits are good during recessions, which are repaid when the economy improves.  They are hostage to the baseless belief that deficits don't matter.  Democrats have never experienced an economy good enough to pay down the debt (except for Bill Clinton, who did.)

Unfortunately, both Supply-side economics and Keynesian economics have become religions.  Austrian economics remains mere accounting, i.e., debits and credits.

For some reason, bond specialists in particular are true believers in Austrian economics.  In a recent speech, the current "Bond King" Jeffrey Gundlach, said "This is almost a suicide mission.  At some point, with debt and its service cost increasing, there will be a collision.  There could be a solvency problem."

Think about it:  interest rate increases are appropriate during the latter stages of business cycles.  Budget deficits are more appropriate during the early stages.  Assume you had an adjustable-rate mortgage, and you get notified that the rate will increase from 4.5% to 5.5%.  Would you want to increase your mortgage amount, or would you want to start paying it down faster?

Our national debt is increasing while interest rates are increasing, which is very rare.  A 1% increase in debt service on $20 trillion debt is $200 billion each and every year.  That would be enough to fund the beloved "Wall" and build a dozen hospitals . . . each and every year.

The inevitable train-wreck is not in the foreseeable future, but it is out there.