Quote Originally Posted by eagle2 View Post
The deficits for 2020 and 2021 are exceptionally large because of the pandemic and the stimulus, which is temporary. The budget deficit is projected to fall to $800 billion by 2023.

Wages and prices are always based on supply and demand, except in cases where there are laws regulating them, such as minimum wage laws or contracts. In most cases, businesses are going to price their products at the highest possible price their customers are willing to pay for the quantity they hope to sell, regardless of whether or not they anticipate inflation. For example, if Ford is producing and selling one million pickup trucks a year, and they determine that they can increase the price of their pickup trucks by $5,000, and still sell one million of them, they will most likely increase the price. If they determine that increasing the price of their trucks by $5,000 will result in decreasing the number of trucks sold by 400,000, then they most likely won't increase the price by that much. If there are issues that result in Ford not being able to produce one million trucks, such as supply chain issues, or plants being temporarily shut down because of a pandemic, and they're only able to produce 600,000 trucks instead of one million, then they would be more likely to increase the price by $5,000, if they determine they could sell all of the trucks they produce at that price.
This is getting us nowhere. You think that supply and demand are the only forces at play. I think that the macroeconomics are more nuanced. Time will tell.

I hope you are right about the out year deficits but I am convinced that it will not play out that way. I would love to be wrong but I have looked at past Congressional behavior. Even under Gramm-Rudman we did not see real budget cuts. Just reductions in the rate of increase in spending. At one point the increases in spending were overtaken by revenue increases so that we had surpluses in Clinton's second term. At the risk of seeming to personalize ( not intended Eagle ) -If you want to bet your money on the projected anything and/or the use of "dynamic scoring " be my guest. I expect the Congress to use current spending as a baseline and add on to it. Even if the Republicans take over in 2022. We do not have a strong President to rein in the excesses and we are stuck with a soft, dovish Fed. History has shown that the last thing Congress worries about is inflation. They love paying off past debts with devalued dollars. THAT was the point of the original post and topic of this thread. Where are interest rates likely to go and what if anything can investors and consumers do to protect themselves as much as possible ? If Treasury rates increase just a point or two then the share of the budget needed to pay interest on the National Debt will also increase. For FY 2021 we are paying about $378 billion in interest on the Debt. That is with ridiculously low interest rates. But the Infrastructure Bill AND the Democrat Wish List aka Stimulus Bill will add trillions, not billions but trillions to the existing National Debt.

Rather than risk a "political" squabble , suffice to say that we will have to agree to disagree on the depth of the pandemic caused economic slowdown and the efficacy of the various stimulus programs. I look at the history of such programs and have argued that they do not work. You are free to take an opposing view. Another thing we will have to agree to disagree about.