Raising personal consumption spending

Some economists think individual consumption  tax dollar spending should be higher.

Note, this is not inflation, and the three lines in the chart labeled PCE, annual change is not the deflator, so the left axis is less important thaen the offset between the three PCE lines and the ten year treasury yield.

So this is good as a relative measure, if we got the PCE up another half point then the ten year bumps a half point, in the trend.  The offset between the lower and upper lines remains constant.

Why? Dunno, do not care. I know this chart defines the default trend if PCE goes up, that is all I need, that is what instills fear.  If the ten year jump a half point, interest charges go up almost 100 billion, because of rolling over 100% of GDP. A 100 billion is both Harris teachers and Liz renters, or is all of Bernie Something for All, or is equivalent to 5 new aircraft carriers.  Raising the PCE, if the fed could do it, likely puts Congress into shut down mode, and that leads to Trump Shock.

So, in conclusion, yes indeed, we will get PCE up a half, maybe a full point, for moments only.  But after a Pareto efficient Trump shock the ten year trends back to 2.1%, where it belongs, and PCE to a residual 1% growth over a finite period, until we shock again. On net, after all the reorderings of priority, the Fed dumps about a third of the debt, and recovers half of that back in productivity gains due to a Pareto efficient Trump shock.

We will not do a Pareto Inefficient Trump shock, we will attempt a ten year sequester instead. In other words, it is deflationary time until we figure out a good shock plan. A Pareto efficient Trump shock is to grant a 15 year period of opportunistic defaulting power by the Fed of some defined quantity.

The Pareto efficient part is the discovery that we should not be paying the ten year rate for government debt. Our term structure should be closer to ten years if government accounts were managed on individual, by agency, cash flow.  We can do that, and still be relatively neutral on the left/right axis.  That is the Pareto efficient part, we just make everything a bit more accurate.

So the Trump Shock is a reformation of the Fed and its relationship to Congress. Congress has a slightly better time of it, being armed with accurate velocity equations for government goods.  And we all expense the blunders of the past to all of us, from the past, before we die off.