text: During Trump’s time in office, the national debt increased by roughly $7.8 trillion. After only one year, the Biden administration has authorized over $5.14 trillion in spending through Congress. Increasing national debt not only weakens economic growth, but remains a cause for concern for international holders who view the dollar as a safe-haven asset. The national debt is nearly $30 trillion, and the Congressional Budget Office expects the debt to grow to 150% of GDP by 2030 and 200% of GDP by 2050. The CBO also paints a bleak picture for rising federal budget deficits. Rising interest rates also make federal debt more expensive to service. The bottom line is that this is unsustainable, as Fed Chair Powell admitted last week. Overall, this means a weakening dollar and a reduced standard of living for Americans, not to mention political and social impacts.Last week, I mentioned the potential for the Fed to pursue a “10×10” plan to tackle the national debt. Despite Fed officials saying this solution is not on the table, readers should consider the personal impacts of a 10% annualized rate of inflation over the course of 10 years, where the federal government can more easily pay down debt through inflated dollars. Substantially cutting costs is a political impossibility and raising taxes alone will not dent the national debt. If the Fed is serious about the federal government reducing debt, a 10×10 scenario is a solution that may become more attractive given the lack of other available options. – M.S.ECONOMIC WARNING INTSUMLarry Summers’ case for worsening inflationFormer Treasury Secretary Larry Summers said this week that “with the loosest monetary policy that we have ever seen coinciding with the tightest labor market that we have ever seen coinciding with the loosest financial conditions that we have ever seen, it seems to me that the right prospect is that we are running the economy in an unsustainable way.” Summers went on to say that, “it is my prediction that we will see increasing discussion of the idea that this is all due to greed, an idea that I believe is not supportable.” Summers added that calls for price controls from the left and calls for the acceptance of abnormally high inflation rates would contribute to higher inflation expectations and, ultimately, more political, social, and economic difficulty. “I believe we are now driving above the speed limit. The central challenge is to achieve a gradual soft landing, and I believe that will require monetary policy substantially tighter than the Fed or the market now anticipate.” (AC: This means higher interest rates, which will weaken economic growth and could trigger a market bubble pop. I continually say that the Fed has no good options left, only painful ones. – M.S.)Holiday spending falls in DecemberAccording to the St. Louis Fed, retail spending dropped by 1.9% during the December holiday shopping season. According to the Commerce Department, online sales were hit the hardest, down 8.7%. The latest consumer sentiment survey conducted by the University of Michigan shows that consumers’ expectations for inflation over the next five years rose to 3.1%, up from the 2.9% increase that was reported in December. (AC: Between a weak holiday sales season, reductions in economic growth forecasts for 2022, weak jobs numbers from December, and other indicators, this economy is not as strong as the Fed has described. – M.S.)Exxon: Oil prices to come down