Did the US government & FED created a crowding out effect on the private sector?
It seems that at the US nor French Treasury department no one remembers the seminal paper published by Reinhardt, and Rogoff in 2011 that documented that economies tend to lose 1/3 of their real GDP growth potential when Debt to GDP ratio rises above 90% for more than 5Y.
Indeed, US Net National Savings is a whopping negative $140bn as the Biden government has been on a spending frenzy for the past 4 years (deficit -5.5%), far exceeding household, corporate, and foreign savings.
This Caligulan spending has pushed the US Federal Debt to 125% of GDP at a time when rates have quadrupled.
As it was the case for emerging economies 30Y ago, that might be starting to crowd out the private sector that have been shedding jobs, Unemployment up 20%, triggering the feared Sahm Rule.
If history is any guide, #growth should continue to decelerate along side #inflation, pushing #interest #rates downward while the curve steepen.
The way I see it there are 2 good news;
1) the Fed has woken up and realized that they are arming the economy, and #M2YoY (liquidity) is starting to rise up 1.3% YoY
2) The #Sahmrule has historically only worked for the US and not for other countries (vive la France).