Mortgage rates are trickling lower on the heels of disinflationary data at the consumer level–which is where you and I feel it most.  Good news there is a welcome reprieve.

Several Fed Governors this week acknowledged that the economy is slowly approaching a tipping point, at which juncture interest rates will need to be slashed to prevent economic harm to businesses and individuals.  I’m going to add one more group in there that also stands to suffer by too great a reduction in GDP: the Federal Government themselves.

With stats waning across many observed monetary monikers, the slowdown snowball can ironically gain avalanche-esque proportions within a matter of weeks.  A quick scenario: a girl loses her job.  She doesn’t buy as much stuff as she did when employed.  She files for unemployment.  She’s getting by but not hitting up the Supersonic and the Starbucks like she used to.  She goes to the doctor and Medicaid foots the bill. This safety net is how the system is supposed to function and it works in moderation. But when not enough people get a coffee and a car wash, those companies consequently need to let people go, which perpetuates the cycle. Next thing you know, all our pets heads are falling off.

If everyone had a cash safety net to weather the storm (continuing the avalanche metaphor), the cumulative results wouldn’t be catastrophic. But as it stands, our debt load is higher than ever.  Individuals, households, corporations, and our most dear Uncle Sam spend more on interest each month than ever in the history of having enough free time on our hands to keep track of that kind of stuff.  The acceleration of debt concerns me and I peddle debt for a living.

So here’s my theory.  I’m not labeling it “conspiracy” because I don’t think that the Fed is maliciously withholding information or in cahoots with one or both of the presidential candidates you don’t like.  On the contrary, I believe they are “Men in Blacking” us. Tommy Lee Jones said it best himself: “A person is smart. People are dumb, panicky, dangerous animals”.  Chair Powell & Co are protecting us from ourselves by being highly judicious with every carefully crafted word uttered from their high offices.  And who’s to say if they haven’t already misspoke and wiped away our memory of things they didn’t want us to see and hear?

With continued deficit congressional spending and higher-than-anticipated interest rates, the U.S. government will spend over a billion dollars on interest payments in 2024.  If that keeps going, we explode; if it drops, we’ll see a recession (see below chart).  A slowdown subsequently generates fewer tax revenues, so that’s a really nasty option, which is one reason I believe we/they keep spending money we/they don’t have.

Now where’s that flashy thing when I need it?