“We’re borrowing and spending, thinking that’s going to turn our economy around,” says Ryan on Fast Money. But it's a mistake.
Ryan's main concern lies with the amount of debt we’re assuming to finance the stimulus. That debt is, of course, paid for by issuing bonds. A lot of bonds.
And in the past bonds have been purchased, in part, by China and Japan, but because the economic downturn is global – both of those nations are now putting their own bonds on the global markets.
“What happens when there is an excess supply of bonds on worldwide markets?” According to Ryan, “the cost of borrowing will rise.” And no one in Washington is discussing what happens when the world begins this gargantuan borrowing spree.”
"Our fiscal policy may be on a collision course with our monetary policy,” he says. Ryan also suggests we’ll have so much debt (and so few buyers of bonds) that either we'll be forced to increase taxes, a lot -- or that the Federal Reserve will have to print more money.
That seems like a worst case scenario and, of course, it doesn't really allow for the potential of the stimulus working. But it's intriguing.
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Trader disclosure: On Feb. 23rd, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders Najarian Owns (GE) Puts; Najarian Owns (GDX) & (GDX) Short Calls; Najarian Owns (HPQ) Calls; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (X) Put Spread; Najarian Owns (WFC) & (WFC) Calls; Seymour Owns (AA), (BAC), (EEM), (FXI); Seymour Is Short (NUE); Seymour's Firm Owns (PCU); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman's Firm Owns (WFC) Preferred; Finerman's Firm Owns (MSFT), (RIG); Finerman's Firm Is Short (IYR), (IJR), (MDX), (SPY), (BBT), (VNO)
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