Sierra Madre Precious Metals

Jerome Powell

The U.S. Federal Reserve raised its benchmark lending rate on Wednesday to the highest level since 2001 to tackle above-target inflation, and signaled the possibility of further increases ahead.

The quarter percentage-point rise lifts the key lending rate to a range between 5.25 percent and 5.5 percent, the U.S. central bank said, adding that it will “continue to assess additional information and its implications for monetary policy.”

The rate-setting Federal Open Market Committee (FOMC) used similar language when it voted to hold rates steady in June, and the latest statement suggests that policymakers are mulling another pause at their next meeting in September. Continue reading →

“Rather than collecting taxes from the wealthy, the government is paying the wealthy to borrow their money.” ~ New York Times, July 7, 2023

Titled “America Is Living on Borrowed Money,” the editorial observes that over the next decade, according to the Congressional Budget Office (CBO), annual federal budget deficits will average around $2 trillion per year. By 2029, just the interest on the debt is projected to exceed the national defense budget, which currently eats up over half of the federal discretionary budget. In 2029, net interest on the debt is projected to total $1.07 trillion, while defense spending is projected at $1.04 trillion. By 2033, says the CBO, interest payments will reach a sum equal to 3.6 percent of the nation’s economic output.

The debt ceiling compromise did little to alleviate that situation. Before the deal, the CBO projected the federal debt would reach roughly $46.7 trillion in 2033. After the deal, it projected the total at $45.2 trillion, only slightly less – and still equal to 115% of the nation’s annual economic output, the highest level on record. Continue reading →

A month ago, the fake debt ceiling fight ended and Congress suspended the federal government’s borrowing limit for two years. Since the debt ceiling deal, the US Treasury has added a staggering $851 billion to the national debt.

Within a week of the debt ceiling suspension, the national debt cracked $32 trillion and as of June 30, it stood at $32.33 trillion. Continue reading →

Is a recession coming? Is this the calm before the storm? JPMorgan Asset Management Global Head of Fixed Income Bob Michele said that today’s economic climate calls to mind the lull seen in the 2008 financial crisis.

Michele, who manages more than $700 billion worth of assets for JPMorgan, thinks the current financial situation is pretty deceptive. In an interview, he said: “This does remind me an awful lot of that March-to-June period in 2008.”

A recession has been brewing for much of the year. The recent resurgence in the stock market following climbing interest rates and high-profile bank failures is being interpreted by some financial experts as a sign that a recession could be just around the corner. The coming months’ data could end up showing that we are now in that “calm before the storm” phase. Continue reading →