GM I keep hearing about how prices going up means Warsh is less likely to cut. It seems like we just haven't had enough repetition of how this works, so apologies if you've heard this before, but it looks like we need a reminder: When the debt is high enough (aka, times of fiscal dominance), higher interest rates are not a way to curb inflation, but rather, a driver of it, because the interest is paid out by the treasury as new money into the system through the issuance of new debt to refinance the old. We're currently at well over a debt:gdp ratio of 100%. Meanwhile, the prices we're seeing are driven not primarily by the expansion of broad money (private formation of capital + money printing) but rather, by supply shocks, largely caused by the wars in Iran and Ukraine (as well as tariffs to a lesser extent). Perhaps ironically, NOT cutting rates MAY actually help with the labor situation though, for the same reason, from companies that do not have much in the way of debt on their balance sheet, as the newly issued money provides a potential for more demand while the drag of higher costs of borrowing are not borne by them. But I wouldn't count on this entirely, as their demand base is in many cases going to be taking on more debt just in attempting to cope with the price shocks. Cutting rates doesn't necessarily help much either, as in the face of supply shocks, while you get less issuance of base money through the treasury and fed, you give the private sector access to blow a credit bubble to address the supply shocks (but meanwhile, still can't actually print barrels of oil or truckloads of fertilizer). Fiscal spending coming down would be something. But a quick look back at how well things went with DOGE will let you know just how hopeful I am about that going anywhere fast. And the austerity would cut quite deep, to the point of likely a sharp rise in uprisings and instability. I'm not sure how many people realize just how dire the situation in the monetary system is these days, though the bond market sure seems to be waking up this week. Have you stacked your sats today? Maybe this is less a GM note and more of a WAKE UP note...but hopefully it finds you with a nicely intact stack and a positive productive outlook to meet it all with.