Janet Yellen Said What?

Talk about kicking the can down the road, the current administration has left the U.S. fiscal house in a precarious state. Inauguration Day for President #47 is 13 days out – on January 20th, which will coincide with the time that the Treasury Department must take “Extraordinary Measures” to avoid breaching its statutory debt ceiling. The Treasury will ask for additional time to deal with the debt ceiling. In other words, ‘welcome back Mr. President’ will be followed with an immediate emergency meeting to avoid default. To be clear, the U.S. will never default on its debt, as they will continue to rely on Continuing Resolution (CR) as they have in the past. The government is heavily reliant on short-term bills to fund its operations/spending, and must sell a shocking quantum of ~$10 Trillion in debt in calendar year 2025 to meet its obligations.

As of today, the percentage of UST debt that has a maturity of 1-year has grown to ~40%, an alarming and precarious figure. Not only are 6-7% deficits unstainable in the long-run, the funding method of relying so heavily on short-term bills is simply irresponsible. I pray that we fix our spending problem and put in place a sustainable and intelligent debt term structure.