For those looking forward to rate cuts by the Federal Reserve, last week brought a lot of positive news. Month-over-month, the Consumer Price Index was flat, wholesale prices fell 0.2%, and import prices dropped 0.4% (CNN, CNBC, & Reuters). Although these reports seem encouraging for the near future, America’s long-term outlook on price inflation likely has not changed because of the fundamental problem that drives prices higher. When it comes to the national debt, there are about 35 trillion reasons and counting that explain why inflation will likely be problematic for years to come. Washington’s historical inability to balance its budget means that once it burns through the remaining $723 billion it raised from tax season and the $389 billion still held at the Fed (largely by Money Market Funds), the government will quickly run out of lenders (FRED). It’s possible that we could witness a repeat of the 2019 Repo Crisis when interest rates spiked, which caused the Fed to jump back into the Treasury market, buying up $382 billion in bonds by inflating the money supply, all before the pandemic started. Industrial investors who are waiting on the sidelines for lower rates should consider taking advantage of the current lending environment. The bond market is relatively stable now but it could only be a matter of time before volatility makes a comeback.