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6/6 I've long argued that this level of deficit spending will NOT be fixed at the ballot box. Whoever wins will continue to spend like a drunken sailor and borrow to do it. What stops this is the markets putting their foot down and imposing some discipline. This is a nice way of saying that the bond market blows up, bond prices plunge, and yields soar enough to FORCE the government to rein in spending. I've suggested an example of this in 2022 in the UK when the market rejected Liz Truss's (UK PM) mini-budget. Someone else is thinking exactly the same way ... -------------------------- Goldman Sachs Group Inc. President John Waldron warned that out-of-control spending could expose the US to serious risk in the event of a political crisis. Waldron drew comparisons to the market jolts from the pension-fund turmoil that rocked the United Kingdom in 2022. UK pension funds used a strategy known as liability-driven investment, or LDI, to protect themselves from falling government bond yields. That move backfired when the government of Prime Minister Liz Truss announced unfunded tax cuts and increased state funding — sending yields soaring, and exposed a major risk at the heart of the country’s financial system. “Think about the LDI situation that happened in the UK. That was really precipitated by a political crisis,” Waldron said. “It was a Truss budget at that moment that didn’t have a lot of credibility. And then there was a bit of a run on Gilts. And then we uncovered in the run on Gilts that there was a levered structure in the Gilts.” A version of that turmoil could emerge in the US if there’s a political crisis, Waldron said. “So I think we should worry about that,” he added. https://t.co/4uDSCzNEhc -------------------------- Even if you agree that only markets (and not the ballot box) can stop the Federal Government's enormous spending, it does not mean it has to happen soon. It could happen this year. Or it could be in 10 to 15 years or somewhere in between.