Ken Griffin Warns Inflation Could Persist for Decades as US Spends ‘like a drunken sailor’; The Federal Reserve’s Inflation Problem Is Due To Federal Government Spending; Survey: Food Inflation is Hurting Biden the Most

Ken Griffin warns inflation could persist for decades as US spends ‘like a drunken sailor’:

Billionaire Ken Griffin said stiff inflation could persist “for decades” as wars in Ukraine and Israel further push the world towards “deglobalization” — and warned of dire consequences as the US government continues its spending binge.

The founder of the giant Citadel hedge fund — who’s worth a reported $35.5 billion, per Bloomberg estimates — said the federal government clearly didn’t brace for inflation during the pandemic, when it “went on the spending spree that created a $33 trillion deficit.”

Last month, the US government posted a $1.695 trillion budget deficit in fiscal 2023, a 23% jump from the prior year as revenues fell and outlays for Social Security, Medicare and record-high interest costs on the federal debt rose.

The US’s fiscal binge must be reined in, Griffin added, as the country is “spending on the government level like a drunken sailor.”

The Treasury Department said the deficit was the largest since a COVID-fueled $2.78 trillion gap in 2021, though President Joe Biden is still asking Congress for $100 billion in new foreign aid and security spending — including $60 billion for Ukraine and $14 billion for Israel — along with funding for US border security and the Indo-Pacific region. —>READ MORE HERE

The Federal Reserve’s Inflation Problem Is Due To Federal Government Spending:

“Don’t fight the Fed” is a stock market mantra that has proven true thus far in 2023. The Federal Reserve’s campaign to halt inflation has been implemented by 11 interest rate hikes amounting to a cumulative 5% increase in the Federal Funds rate. While investors seem to have gotten the message, the US Government continues to “fight the Fed” with inflationary spending and borrowing which has driven the cost, ultimately borne by US taxpayers, to concerning levels. Come on man, stop the wanton spending and we solve all the ills right now. Federal Deficit, Federal debt, Federal debt service, interest rates, too strong an economy, practically negative unemployment are all rooted in excess government wasteful spending.

The Fed is technically an independent entity, but its operations are closely entwined with the federal government to the point that many view the central bank as something of a fourth pillar of government along with the Executive, Judicial, and Legislative branches. Viewed in that light, it is perplexing how the actions of the Executive and Legislative bodies so frequently work against the goals of the Federal Reserve. Given the constant communication between the Fed and the Federal Government, one would expect the two to be on the same page regarding spending and servicing the federal debt.

For background, the Federal Government generally spends more than it collects in tax revenue and issues bonds to make up the funding shortfall. The US has only experienced a fiscal year-end budget surplus five times in the last 50 years, most recently in 2001. When the Fed cut interest rates to 0% during Covid-19, it offered a rare opportunity for the Treasury to extend the duration of its borrowing and lock in ultra-low rates for the next 30 years. Yet the Treasury did not meaningfully increase its long-term borrowing. It was a historically poor financial decision, as billionaire investor Stanley Druckenmiller recently noted, “Janet Yellen — I guess because political myopia, whatever — was issuing two years at 15 basis points when she could have issued 10 years at 70 basis points or 30 years at 180 basis points.”

While it is not a completely fair analogy given the size of government borrowing and its role in maintaining a degree of predictability for geopolitical stability, Druckenmiller also noted that most American homeowners jumped at the rare opportunity to lock in mortgage rates along with a record-setting wave of corporate refinancing. It is puzzling that the Treasury wouldn’t recognize the opportunity to drastically increase long-term borrowing, or even issue special extended-duration bonds with 50-year maturities while rates were at historic lows. —>READ MORE HERE

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+++++Yahoo Finance-Ipsos survey: Food inflation is hurting Biden the most+++++

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