VXF - Investment Implications Stemming From A U.S. Sovereign Debt Default

• There are no good choices left for central banks in the US and Japan. They can’t both fight inflation and fund their government’s debts with low interest rates.
• The debt bubble has been long in the works, but there are no options left to deal with it in a painless way. It’s either high inflation or sovereign default.
• I describe how Japan has implemented yield curve control (YCC) to support the government debt. It’s a preview of what could happen in the US too.
• Central banks can’t simultaneously (1) Fight inflation, (2) Support the currency, (3) Fund government deficits and (4) Offer artificially low interest rates. Pick two.
• When there is a societal loss of confidence in central banks, interest rates skyrocket, the currency collapses, and the choice is between sovereign default or higher inflation.

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