Deficits Forever

Mandatory Madness

Who Holds the Debt?

Spending Growth

Where Did All My Travel Go?

“Diamonds are forever,” according to the jewelry industry. That may be a slight exaggeration, yet diamonds will certainly outlive you and whomever you give them to.

Debt isn’t forever but can definitely seem like it. That feeling is a clue you have too much debt. Wisely used, debt helps build income-generating assets that pay for themselves. The payments are manageable because you’re also getting something else of value.

On a national level, though, we’re not investing in the future. We use debt to fund routine government services, long-promised benefits like Social Security and interest on all of it at the highest rates in decades.

Anyone who has ever been over their head in debt can testify how paralyzing it is. You become ultra-cautious, unwilling to take risks because even a small mistake can be catastrophic. The same can happen (and has happened) to entire countries when the government gets over its head. Sovereign defaults—or the fear of them—lead to austerity for everyone.

The United States has so far avoided that fate because we have unique advantages: the largest economy, the global reserve currency, military strength. Yet even with those, we face limits. No one is going to foreclose on the US Treasury but at some point, they will become less willing to lend it more cash.

Long before then, the debt will suppress economic activity enough to force the changes voters and politicians have been unwilling to make. Today we’ll look at the latest federal budget data and see how much time we have.

In this wide-ranging interview with Ed D'Agostino, Keith discussed his 2023 market thesis, inflation, Fed policy, as well as big picture risks and opportunities he sees. It's a great primer on Keith's current thinking.