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How to get inflation > target in 2 easy steps:

1) US govt says: "The $864B deficit we ran in June is the new normal. That'll be the deficit EVERY mth from now on."

2) US Fed then says: "We will not allow 10y UST ylds > 60bps."

This is likely coming.…
The world has long been gaming the USD system to its advantage; what I describe above would be the US gaming the USD system for OUR advantage for a change.

The world wants USDs? Fine...we'll MMT $10T per year of free stuff until the world adjusts the USD's value accordingly.
3/ "You want to threaten our Rx supply chain China? Fine. Executive order, $200 billion in 0% money 'loaned' to the US Rx industry to bring back mfg by 2022. Fed will hold the notes."

"INTC? Your turn. Here's $200B for you to build 10 new fabs in the US by 2023."
4/ "You have One Belt One Road? Fine. Executive order. Here's $2T in 0% money for rebuilding the infrastructure of the biggest 'Emerging Market' in the world - the US Midwest."

"Who's next? Students? We need you. College is now free, & we're forgiving $1.5T in loans."
5/ "You guys still want your USDs, or have you had enough yet? Are you willing to let USD drop to where you have to consume your own production, while we make more of ours? But the process of MAKING our production will make the US the #1 econ in the world for decades to come."
6/ Of course at some point around point #2 in this thread, the USD-denominated credit mkts would begin to experience some indigestion...but consider that in the context of what the Fed's done in the last 3 mths, & after all, that's what Fed YCC will be for.

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