Doug Kass: Wall St. and Washington's Madness Are About to Collide
With all eyes on AI, who's paying attention to the economic absurdity playing out in D.C. right now? You better watch this one.
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Everyone has been focused on the artificial intelligence trade -- more than on anything else in the market. This has put more fundamental and enduring concerns on the back burner.
One of those core concerns is the absence of any fiscal discipline from either political party in Washington. (I will be discussing this at more length on Monday morning).
This is sheer madness.
Government spending was up 18% year over year last month. The deficit is exploding. The U.S. government has borrowed $2.2 trillion already this year with over a month left, or 6% of gross domestic product, and this is while the economy is ... OK.
DOGE is effectively dead and this is with Republicans controlling the government and Congress and Democrats caving in on the government shutdown. Inflation is running well above targeted levels. We are being told to expect 3%-4% GDP growth next year, thanks in part to tax cuts. And now Pres. Trump wants to appoint Kevin Hassett as the head of the Fed to aggressively cut rates... How is this supposed to end well?
Energy prices are about as low as can go, too. How do we not have a big inflation problem, again? Will rate markets figure this out? Can gold go to $50,000?
Also, now the administration wants to send out the $2,000 checks on top of it all.
Didn’t they learn last time under Pres. Biden what this does? It blows out the deficit more, more money into the economy, more inflation. This is when “affordability” is the biggest issue being faced from a political perspective, too. Handing out money has the opposite of its theoretical intended consequences. This is all so absurd.
At the time of publication, Kass had no position in any security mentioned.
