For years – for decades – I’ve expected ‘The National Debt’ to the sink the economy but the crash never came; it defies common sense but, somehow, no matter how much the politicians spent the chickens never came to roost. Hardly a soul even noticed when President Trump didn’t mention the debt in his State of the Union Speech – but one person did: David Stockman, who was President Reagan’s budget director.
History, mathematics and physics are all decipherable but the Science of Economics is a mystery – so I can’t begin to explain why Stockman believes that a ‘Debt Reckoning’ is at hand, but his theory has something to do with “the Fed and other central banks” monetizing the debt which apparently means that, somehow, the Fed and central banks have been printing money.
And, now, that ‘monetizing’ is going to end: The banks have started selling the debt they printed money to buy and, once that tide rolls ashore, the roof is going to cave in.
As I said, economics is a mystery. But if you’re looking for a storm cloud on the horizon this might be a good one to keep your eye on.