The Trump Bump and the 12% swing in the dollar

The downward swing in the dollar was rapid, and 12%.  Import and import prices jumped, about 20% of the economy.  So we are adding a half to full point to inflation, very  soon and very unsustainable.

The ten year rate will want to rise, and the senators, worst case, are looking at eight hundred billion dollar interest charge, up from five hundred a few years ago.  Interest charges are discovered, in real time.  If they are in the trillion dollar range, the senators will be endlessly haggling over their programs, shut down is impossible to avoid.

Interest charges are priced, in real time. 

You have to read the bill to find out what's in it , so to speak.

We do not know the cost of Obamacare completely, we are discovering it.  Nor we do know if the boomers will stampede.  It is uncertain that the millennials actually agreed to pay over 3.5% of income to federal interest charges.  Defense budgets are whacko all around.

The volatility of interest is quite obvious, 100 billion dollar swings over a year or two.  The senators cannot measure the relative risk among the hundred odd discretionary programs they rely on.  Their word is as good as their willingness to continually haggle and prioritize.

Interest as a fraction of RGDP

See those two peaks at .035?   

This economy cannot do that level anymore, that is why we are volatile  on the right, we hit a bound, a hard bound.

The interest charges have bankrupted a bunch of government  programs.  But the structure of government is very contingent on these programs, they keep the small and mid sized states going.  Hence the senators, seemingly undecided but in actuality they are in DC hovering over these programs to the exclusion of any other business.

Those two peaks at .035  caused the upper bound, they caused a quantization effect.  So, to the right on the graph we do not even test .03.    You don;t need economics to see the issue here, if this is a natural process  then we can infer a regime change, a requantiztion, in the process because the two parts of the graph clearly anti-correlated. So, without involving the economists at all, we might expect a new, larger jump in volatility if we requantizated above the ,035.  It is all about a process somewhere packing sphere and it generates this kind of regime change.