Episode 101. Sean is back on the boards, healthy and happy, and we are digging into the trickery happening over at the Treasury and the impossible position the Federal Reserve has put itself in.
Here is the setup. The July Treasury statement shows $334 billion came in and $766 billion went out. That is more than double. A $432 billion deficit in a single month. Scott Bessent's answer is that we will grow our way out of it, mostly through tariff revenue. So we ran the math. Our GDP grew 2.9% in 2023 while our debt grew 7.2%. In 2024 it was 2.8% growth against 6.9% debt. In 2025, 2.1% against 6.1%. Our debt is growing two to three times faster than our economy. Monkey no believe that.
Then it gets worse. Nobody wants our long term debt, so the Treasury announced it is doubling its own bond buybacks and may tap nearly a trillion dollars from the Treasury General Account to do it. That is manufactured demand. We are buying our own debt to suppress our own yields. One analyst called it the world's largest interest only adjustable rate mortgage, and the adjustment dates come every 28 days.
Meanwhile Kevin Warsh is sitting at the Fed with two mandates and no way to hit both. Raise rates and you kill the job market that already has 5.6% unemployment for college grads under 30. Cut rates and inflation, already at 3.7% on PCE, runs away from you. If they hike they lose the long end. If they cut they lose the long end. That is the whole game.
I close with Trump saying out loud that the ultimate intervention is our military, Smotrich openly laying out the expansion plan, and the Las Vegas bio lab charges quietly getting dropped. Own an asset or get left behind.
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