WTFinance Bond Market Disaster if Powell Cuts Rates with Jim Bianco
Jul 24, 2025
Join Jim Bianco, President and Macro Strategist at Bianco Research, as he delves into the intricate world of finance. He discusses the potential consequences of a Federal Reserve rate cut amid rising inflation and tariffs affecting international companies. The conversation touches on the impact of immigration on wage inflation and the climate of government debt. Bianco evaluates the precarious bond market situation and speculates on the future of stablecoins versus traditional money market funds, highlighting the new economic landscape post-pandemic.
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Dangers of Fiscal Dominance
- Cutting rates to save interest costs leads to fiscal dominance, chaining monetary policy to fiscal needs.
- This approach almost always results in long-term economic disaster due to ignored inflation and suppressed rates.
Tariffs and Labor Market Shifts
- Tariffs are beginning to impact inflation, but it's unclear who bears the costs: consumers, exporters, or companies.
- U.S. population growth is collapsing due to low immigration and fertility, reducing the jobs needed to meet labor demand.
Japanese Automakers’ Tariff Example
- Japanese automakers initially absorbed tariffs by cutting prices, but are now passing costs to consumers.
- This illustrates that exporters may bear some tariff cost temporarily, but inflation will likely rise for consumers over time.