Let’s look at the largest federal expenses for fiscal year 2024:

Social Security: $1.5 trillion

Interest Payments: $1.1 trillion

Medicare: $869 billion

Defense: $826 billion.

This is why the incoming presidential administration is placing a high priority on aggressive spending cuts and fundamental reforms. They have to get the fiscal deficits under control, and ultimately tame inflation and bring interest rates down. Or else interest expense will quickly crowd out most federal spending… which would likely lead to a massive collapse in the U.S. Treasury market and spur rampant inflation – even worse than what we have seen to date. This is why I predicted that we would see a lot of volatility in the stock market in 2024 – both on the upside and the downside. The interplay between inflation concerns, interest rate expectations, and government deficits was bound to create periods of uncertainty.

Source: Brownstone